LONDON, Nov 13 (IFR) - Kroll Bond Rating Agency wants to expand its small European operations, which opened in September, across the European Union after the European Securities and Markets Authority approved on Monday its application to be registered in the region.
US-headquartered Kroll has six analysts in its Dublin office, covering project finance, asset-backed securities, banks and UK RMBS and CMBS. Until now it has been unable to formally publish ratings on EU issuers, apart from securities issued in other jurisdictions such as the US.
ESMA regulates credit ratings agencies operating in the EU following reforms in the wake of the financial crisis. It fined Moody’s €1.24m in June for breaching the regulation after it failed to show how it came to its conclusions on several EU supranational agencies.
ESMA has also fined Fitch and DBRS in the past and censured S&P.
As part of its remit ESMA has statistics on market share between the various agencies. The latest figures showed that S&P had 45%, Moody’s 31.3% and Fitch 16.6%. DBRS was the next biggest with 1.9% but none of the other 22 had more than 1%.
A wave of new agencies has been set up since the financial crisis, which exposed many of the established players for giving their issuer clients high ratings shortly before they experienced financial difficulties.
“We are the largest of the post-crisis rating agencies by a fair margin,” said Jim Nadler, chief executive of KBRA. “If you add up the turnover of all the other 30 to 40 agencies they have only half of our revenues.”
That business comes from its work in the US, where it has established strong franchises in ABS, CMBS and RMBS, public finance and project finance as well as financial institutions. It has published over 8,000 ratings on securities with a value of US$750bn.
“We want to grow in Europe now. In 2017 our revenues were US$90m. In 2018 we expect to have 10% of our revenues in Europe,” Nadler told IFR. So far the firm is not active in Asia. (Reporting by Christopher Spink)