Definition of unsolicited rating

A rating agency’s assessment of a borrower’s creditworthiness without any involvement of the borrower itself. In particular, the borrower does not pay for the rating assessment.

Unsolicited ratings are usually based only on publicly available information about a borrower’s credit quality. Rating agencies may have an interest in announcing unsolicited ratings to complete their coverage of a specific market or to create access to a market where the agency has not been present before.

Example

The observation that unsolicited ratings are often lowly graded has led to the accusation that agencies use this instrument to blackmail borrowers into soliciting (and paying for) a rating assessment. Research has shown, however, that low-quality issuers are less willing to pay for a credit rating, receiving instead unsolicited ratings that are low-graded. [1]

FT Articles & Analysis

No articles are associated with this term

Related Terms