EU draft proposals branded as ‘wild and hopelessly naïve’ by the market…

EU Politician proposals to treat the sovereign of debts of their countries as a special case subject to credit rating reviews, has been branded ‘wild’ and ‘hopelessly naïve’ by the market.

Draft rules to hinder credit rating agencies from having a negative impact of downgrading countries, include restricting them from issuing updates on sovereign debt to three pre-agreed dates a year.

Georg Grodzki, head of credit research at Legal & General Investment Management, said the restrictions could have the opposite effect: “The rules are hopelessly naïve, and it doesn’t do the European Union’s reputation any good in global financial markets.
I’m disappointed that politicians show such little understanding about how markets work and what credit opinions are about.”

Martin O’Donovan, deputy policy and technical director at the UK’s Association of Corporate Treasurers, said that “We could end up with a false market developing.”

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