Credit Risk Rating In Brazil

On April 25, 2012, the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários - CVM) issued CVM Instruction No. 521 (CVM Instr. 521/2012), regulating the activity of credit risk rating (classificação de risco de crédito) in the Brazilian securities market, with emphasis on registration and recognition requirements, information disclosure, and rules of conduct and internal controls of the credit rating agencies (CRAs). The existing CRAs will have to be adapted to the new regulation until January 1, 2013.

The role of the CRAs is a theme widely discussed worldwide. The global financial crisis of 2008 has revealed certain weaknesses of the financial and capital markets and the international community recognized the need to revise the regulations of some sectors and agents, aiming to prevent the occurrence of similar crisis with systemic impacts. Among the agents who deserved a reassessment of the regulator are the CRAs, which issue credit risk