1. A credit rating agency shall use and apply credit rating methodologies which:

(a) contain clear and robust controls and processes for their developments and related approvals that allow suitable challenge;

(b) incorporate all driving factors deemed relevant in determining creditworthiness of a rated entity or a financial instrument which shall be supported by statistical, historical experience or evidence;

(c) consider the modelled relationship between rated entities or financial instruments of the same risk factor and risk factors to which the credit rating methodologies are sensitive;

(d) incorporate reliable, relevant and quality related analytical models, key credit rating assumptions and criteria where these are in place.

2. A credit rating agency shall list and provide a detailed explanation of the following points with regard to the credit rating methodologies used regarding:

(a) each qualitative factor, including the scope of qualitative judgement for that factor;

(b) each quantitative factor, including key variables, data sources, key assumptions, modelling and quantitative techniques.

3. The detailed explanation referred to in paragraph 2 shall include the following: