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Recital 22

Recital 22

(22)Pursuant to Article 136(1) second subparagraph of Regulation (EU) No 575/2013 the adequacy of the mapping should be reviewed frequently because the long-run default rate could change and become representative of a different credit quality step. To that end, recent short run default rates experienced within a rating category should be regularly confronted with their relevant short run benchmarks (‘monitoring’ and ‘trigger’ levels). A breach of the short run benchmarks for a consecutive period of 2 years could signal a weakening of assessment standards which could imply that the new underlying long-run default rate is representative of a less favourable credit quality step. This signal would be more relevant where the trigger level is breached instead of the monitoring level. In particular, a single defaulted item associated with the highest rating categories could trigger consideration of the review of the mapping assigned to the single ECAI that rated that item.

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