LONDON (Reuters) - Ratings firm DBRS plans to add 19 more countries to the list of sovereigns it covers over the next few years, the latest stage in a bid to take market share from the big three Standard & Poor's, Moody's and Fitch.
The expansion, which will include the 12 European Union and five G20 countries it does not currently assess, could also mean its ratings are recognized in global bond indices, thereby cranking up its importance for investors.
"First of all we want to deepen our analysis and fill in the gaps, but we are also finding that investors increasingly differentiate between markets," Fergus McCormick, DBRS' head of sovereign ratings told Reuters on Wednesday.
"It is a bit like putting together a jigsaw puzzle."
DBRS, which as recently as 2006 only covered its home country of Canada, will hire more staff in New York and London as part of the its plan to grow its list of 37 sovereigns and supranational borrowers by more than half.
While it may still struggle to compete with the big three which all rate over 100 countries, the expansion could see its ratings used in indices such as those compiled by JP Morgan and Barclays, where decisions on whether a country is included are partly based on an average of key agencies' ratings.
That would mean DBRS's sovereign scores, which on average tend to be higher than its rivals, could potentially determine whether a country stays in or is pushed out of these indices closely followed by a host of international money managers.
In recent years, DBRS' profile has been aided by the European Central Bank's use of its ratings, along with S&P, Moody's and Fitch, which determine if and on what terms a country's bonds can be used as collateral for ECB funding.
The ECB uses a system where only the best rating of the four agencies counts and DBRS' investment grades for Italy, Spain, Ireland, Portugal which were higher than the rest at the height of Europe's debt crisis, helped prop up those fragile countries.
The next countries to be added over the next couple of years are Luxembourg, Slovenia, Slovakia, Latvia, Estonia, Lithuania, Poland, Hungary, the Czech Republic, Romania, Bulgaria and Croatia in the EU.
Elsewhere it also plan Indonesia, South Korea, Saudi Arabia, Singapore and Hong Kong, as well as under pressure emerging market giants South Africa and Russia.
Editing by Jeremy Gaunt