Moody’s Investors Service is asking for market feedback on a proposed follow-up to its operational risk guidelines concerning ABCP programs in a Request for Comment (RFC) issued yesterday.
Moody's announced the original risk guidelines on March 15 that the rating agency stated are meant to create clear parameters for the analysis of administrator’s potential performance disruption risk on ABCP programs.
According to yesterday's release from Moody's, the RFC maintains the goal of the original rules, which is to focus on the credit and ratings effect of operational risk.
“The RFC provides a definition of operational risk for ABCP programs, starting with the identification of parties involved in the critical path for the timely repayment of ABCP,” said Sophie Berthelon, senior vice president at Moody's.
The primary addition of the RFC is expanded criteria for determining operational risk to ABCP programs resulting from operational disruption. The proposal takes into account the “creditworthiness of key transaction parties and the existence of support” to provide a deeper analysis.
Moody’s anticipates that almost all existing ABCP programs will meet these new standards without any changes, with only a small portion being negatively affected. The release stated that the proposed update does not significantly change already published sections on operational risk from previous reports.
Comments will be accepted by Moody’s through July 15.