Code of Standard Practices for Participants in the Credit Rating Process Issued by U.S. and European Corporate Treasury Associations

Code of Standard Practices Aims to Restore Confidence in Credit Rating System

BETHESDA (MD), LONDON, PARIS - (April 14, 2004) -- In a move designed to restore confidence in the credit rating process, three prominent global treasury and corporate finance associations today announced the release of an Exposure Draft of a "Code of Standard Practices for Participants in the Credit Rating Process." The Code of Standard Practices is designed to restore confidence among issuers, credit rating agencies, investors and the regulators who oversee the credit rating process by creating enhanced transparency, protecting non-public information, guarding against conflicts of interest, and improving communications with market participants.

The Association for Financial Professionals (AFP), an organization of 14,000 corporate finance and treasury professionals in the United States, along with the United Kingdom's Association of Corporate Treasurers (ACT) and France's Association Française des Trésoriers d'Entreprise (AFTE), together took the initiative to develop this Code of Standard Practices for Participants in the Credit Rating Process. The three associations undertaking this effort are each leaders in their geographic regions and collectively they represent more than 18,500 corporate treasury and finance professionals. The Code of Standard Practices is further supported by the International Group of Treasury Associations (IGTA) and the Euro Associations of Corporate Treasurers (EACT).

The Associations are soliciting comments from interested parties through May 31, 2004 on the Exposure Draft and regarding the appropriate manner in which to incorporate the final Code into the credit rating process.

"Accurate and timely credit ratings are critical to the efficiency of global capital markets. This Exposure Draft is an important, collaborative, private-sector response to many of the problems that have arisen regarding the credit rating process," said Jim Kaitz, President and CEO of the Association for Financial Professionals. "While the Code is not a replacement for appropriate regulatory action, our three Associations collectively believe that establishing global industry practices for rating agencies and issuers will result in significant improvements in the quality of credit ratings for the benefit of all."

Concerns about the credibility and reliability of credit rating agencies and the credit rating process have heightened during the past several years due to the unforeseen collapse of Parmalat, Enron, WorldCom, and other companies. These concerns prompted the United States Securities and Exchange Commission (SEC) to conduct hearings in November 2002 and issue a Concept Release in June 2003 on rating agencies and the use of credit ratings under Federal securities laws. The G7, Financial Stability Forum, and European Parliament are also looking into ways to regulate rating agencies, yet up to now, these concerns have not materialized in any specific action.

"Investors and corporations alike continue to be frustrated by the rating process while they wait for the regulators to act," said Kaitz. "It is time for the appropriate bodies to act on regulatory improvements that will encourage competition and transparency in the rating agency process. Regulatory action, along with the effective implementation of the Code of Standard Practices will improve the effectiveness of the credit rating process and efficiency of capital markets."

The Code of Standard Practices for Participants in the Credit Rating Process is intended to improve investor and issuer confidence in the credit rating agencies and the judgments they promulgate in their reports. The Code includes recommendations for regulators, credit rating agencies and issuers of debt. The Rating Agency Code of Standard Practices includes recommendations to improve the transparency of the rating process, protect non-public information that is provided to credit rating agencies, protect against conflicts of interest, address the issue of unsolicited ratings, and improve communication with issuers and other market participants.

Regulatory recommendations focus on the credibility and reliability of ratings, transparency in the rating agency recognition process and improving ongoing regulatory oversight of approved rating agencies. Regulatory recommendations also include removing barriers to competition in the credit rating agency marketplace.

Recognizing that the credibility and reliability of credit ratings is heavily dependent on issuers providing accurate and adequate information to the credit ratings agencies, the Issuer Code of Standard Practices outlines issuer obligations in the credit rating process. These obligations are intended to improve the quality of the information available to the credit rating agencies during the initial rating process and on an ongoing basis, and to ensure that issuers respond appropriately to communications received from credit rating agencies.

The Exposure Draft of the Code of Standard Practices for Participants in the Credit Rating Process is available at www.AFPonline.org, www.treasurers.org, www.afte.com.

The Association of Corporate Treasurers (ACT), based in London, England, is an organization of professionals in corporate finance, risk and treasury and cash management operating internationally. Formed to promote the study and best practice of finance and treasury management, it has over 3,300 members and 1,200 students in more than 40 countries.

Association Française des Trésoriers d'Entreprise (AFTE), founded in 1976, represents more than 1,400 members, including 1,050 corporate treasurers or financial managers. Headquartered in Paris, France, its activities include technical committees, conferences, education, publications and representation of corporate treasurers.

The Association for Financial Professionals (AFP) headquartered in Bethesda, Maryland, supports more than 14,000 individual members from a wide range of industries throughout all stages of their careers in various aspects of treasury and financial management. AFP is the preferred resource for financial professionals for continuing education, financial tools and publications, career development, certifications, research, representation to legislators and regulators, and the development of industry standards.