The Bank of Canada has announced several changes to the credit rating requirements for assets that are to be used as collateral under its Standing Liquidity Facility.

As part of the changes announced Friday:

– all non-Government of Canada securities will be subject to credit rating requirements;

– all securities will require a minimum of two credit ratings, at or above the minimum required rating threshold;

– margin requirements that are based on credit ratings will be determined using the second-highest credit rating; and

– the list of acceptable rating agencies will be expanded to include Fitch Ratings — in addition to DBRS, Moody’s Investors Service, and Standard & Poor’s.

These changes come as securities regulators are proposing a new regulatory framework for credit rating agencies in Canada.

The Bank of Canada says that it is also contributing to international efforts to review the role and use of external credit ratings, and will take any recommendations into account in its ongoing review of the SLF collateral policy.

The latest changes will be effective September 7.

IE