Slovak finance body revives corporate bond scoring, but major players stay away

The Slovak Association of Securities Dealers (AOCP) has reintroduced its corporate bond scoring initiative Zelený delfín (Green Dolphin), but with a key change: it now evaluates only those bond issues for which issuers explicitly request a rating. The scoring is free of charge, yet major financial groups such as J&T, Penta and Proxenta have declined to participate, citing concerns about the model’s fairness and relevance, the Denník N daily reported.

Despite this, corporate bonds continue to attract Slovak investors. According to the National Bank of Slovakia, households hold more than €4.8 billion in such instruments — more than in cash. Yet corporate bonds carry significant risk, and experts warn that many investors still confuse them with low-risk savings products.

The updated Green Dolphin model assesses credit risk based on twelve measurable financial indicators, including debt levels and collateral. It is based on a framework used by the Czech Ministry of Finance and aims to increase transparency in Slovakia’s bond market. However, the model deliberately avoids rating the broader issuer group or evaluating market or liquidity risk.

So far, only four bond issues have received a rating. Two from engineering firm Gevorkyan were rated in the low-risk (green) category, while East Slovak Water Company and Social Financing also received favourable, though not green, scores.

Large issuers remain sceptical. J&T and Penta argue the model fails to capture the complexities of the Slovak market, particularly when it comes to special-purpose vehicles (SPVs) used for project financing. They point out that many indicators in the model — such as years of operation or profitability — are irrelevant for newly established entities created for specific developments. J&T also notes that despite receiving poor ratings under the original version of the model, all of its bond issues have been repaid on time.

AOCP originally launched the scoring tool in 2022 but withdrew it after some issuers protested being rated without consent. Legal concerns led to a nearly two-year pause.

With its voluntary and more transparent approach, AOCP hopes the new model will gain investor trust. Still, its usefulness depends largely on whether the investing public begins to demand such ratings from bond issuers — and sees their absence as a warning sign.