On July 18, 2014, ESMA published its technical advice to the European Commission on the appropriateness of the development of a European creditworthiness assessment for sovereign debt. Under the EU Credit Rating Agency Regulation, the European Commission must report to the European Parliament and the Council of the EU by the end of 2014 on the issue. ESMA’s advice sets out the following essential criteria for consideration of the appropriateness of the development of a European creditworthiness assessment for sovereign debt: (i) the independence of the rating process; (ii) the independence of the review function (responsible for annual review of methodologies) from those responsible for the credit rating activities; (iii) confidentiality of pre-rating information; and (iv) the need to have sufficient resources to undertake both the rating and the on-going monitoring.

ESMA’s advice is available at: http://www.esma.europa.eu/news/ESMA-advises-Commission-creditworthiness-assessment-sovereign-debt?t=326&o=home.