29.External ratings for one entity within a corporate group cannot be used to risk weight other entities within the same group.

30.A bank must treat a relevant exposure or the person to whom the bank has a relevant exposure as “unrated” for risk weighting purposes if that exposure or that person does not have a rating assigned to it by the ECAI otherwise used by the bank.

31.Where a bank is applying external ratings to an exposure that corresponds to a particular issue with an issue-specific rating, the risk weight of the claim must be based on this issue-specific rating. In other cases, the following requirements apply:

1. (i)In circumstances where the borrower has a specific rating for an issued debt claim, but the bank’s exposure does not relate to this particular rated claim, a high-quality credit rating (that is, one that maps to a risk weight lower than the risk weight that would apply to an unrated claim) on that specific issue may only be applied to the bank’s un-assessed exposure if the exposure ranks pari passu with or senior to the rated issue in all respects. If not, the credit rating cannot be used, and the un-assessed claim exposure should receive the risk weight for unrated claims.
2. (ii)In circumstances where the borrower has an issuer rating, this rating typically applies to senior unsecured claims on that issuer. Consequently, only senior claims on that issuer will benefit from a high-quality issuer rating if one exists. Other un-assessed claims of a highly assessed issuer will be treated as unrated. If either the issuer, or a particular issue from that issuer, has a low-quality rating (that is, one that would map to a risk weight equal to or higher than would apply to an unrated exposure), then a bank with an unrated exposure to the same counterparty that ranks pari passu with or is subordinated to senior unsecured (in the case of an issuer rating) or to the specific issue (in the case of an issue-specific rating) should risk-weight that exposure using the low-quality rating.

32.Where a bank intends to rely on an issuer or an issue-specific rating, the rating must take into account and reflect the entire amount of credit risk exposure a bank has with regard to all amounts owed to it.

33.Where exposures are risk-weighted based on the rating of an equivalent exposure to that borrower, foreign currency ratings should be used for exposures in foreign currency. If there is a separate domestic currency rating, it should be used only to risk-weight exposures denominated in the domestic currency.

34.In order to avoid double counting of credit enhancement factors, no supervisory recognition of credit risk mitigation techniques will be taken into account if the credit enhancement is already reflected in the rating of a specific issue.