Feri EuroRating Services announced the appointment of Gerald Dorsch today (Wednesday) to head a new structured finance and covered bond ratings business, with CEO Tobias Schmidt noting the growing importance of Pfandbriefe and other secured instruments.

The rating of covered bonds has become an increasingly competitive field, with downward rating pressures resulting from the financial crisis bringing differences between rating agencies’ approaches into sharper focus. Changing rating agency methodologies and evolving opinions have exacerbated this and resulted in issuers terminating contracts with raters.

Most notable among these was the ending of relationships with Standard & Poor’s by several issuers when it introduced a new covered bond methodology and the dropping of Moody’s by some of its Danish clients who disagreed with its view of the Danish market.

DBRS last year made a second attempt to break into the European covered bond market and has since rated several programmes in Portugal and Ireland.

Feri EuroRating Services specialises in investment market and product ratings and also carries out economic research, forecasting, and consulting. It provides ratings on investment products such as mutual funds and open-ended real estate funds, and also assigns country ratings.

The company last year became a registered credit rating agency (CRA) under EU regulations.

Tobias Schmidt, chief executive, Feri EuroRating Services

Based in Bad Homburg, Germany, it today announced that Dorsch has with immediate effect taken on the position of head of structured finance and covered bond ratings.

Tobias Schmidt, chief executive of Feri EuroRating Services, noted that Pfandbriefe and other secured instruments are becoming more important, especially for institutional investors, and said the firm was therefore pleased to have secured the services of Dorsch as a “proven expert” to support its efforts in setting up the Structured Finance and Covered Bond Rating business area.

Dorsch was previously at Deutsche Postbank in Frankfurt, where he was responsible for structured portfolio transactions in the liquidity and capital management area and Pfandbrief ratings and reporting. From 2001 to 2007 he was at WestLB, originating and structuring securitisation transactions for corporate and banking clients.

Feri EuroRating Services is part of Feri Group, which was founded in the 1980s and since 2006 has been a part of consultancy group MLP. Among the shareholders bought out by MLP was Harald Quandt Holding, one of Feri’s co-founders and a company of the German industrialist family associated with BMW.

An analyst at an established covered bond rating agency suggested that while Feri might face an uphill struggle in winning business, its heritage and owners could give it the necessary “stamina” to make a go of it.