In the EU, credit rating scales are not standardized. Each Credit Rating Agency (CRA) may define its own scale and symbols, which can differ across regions, time horizons (short vs long term), and even currency risks (foreign vs local).
📊 Despite this variety, regulators require all ratings used for regulatory purposes to be mapped to a common Credit Quality Step (CQS). These mappings were defined in 2016 by the European Supervisory Authorities (EBA, EIOPA, ESMA) and come with benchmark default rates over a 3-year horizon.
For example: ➡️ A BBB-rated entity is expected to have a maximum 3-year default rate of 2.39% under the Banking Regulation.
🔵 Whether you’re an issuer, investor, or policymaker, understanding how these symbols translate into risk is essential.
👉 Check out this new EACRA educational paper below to decode the symbols, categories, regulatory steps, and benchmarks in one glance.
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