CS Professional · Environmental, Social and Governance (ESG) - Principles and Practice · Governance Influencers

Meridian Textiles Ltd, a listed company, has engaged a credit rating agency (CRA) to rate its proposed non-convertible debentures. The CFO asks the agency to publish only a favourable rating and withhold any lower assigned rating. Which governance expectation of a rating agency as a gatekeeper does this request offend?

The request offends the expectation that a rating agency must be independent and disclose the rating it actually assigned. An issuer cannot suppress an unfavourable rating or choose the final symbol, because investors rely on the agency as an unbiased gatekeeper.

1. AThe agency must disclose the rating it has assigned and not allow the issuer to suppress itCorrect
2. BThe agency must obtain shareholder approval before publishing a rating
3. CThe agency must share its draft rating with all debenture trustees first
4. DThe agency must let the issuer pick the final rating symbol