3A.1 Article 122(6) of the Credit Risk: Standardised Approach (CRR) Part of the PRA Rulebook allows a firm using the SA, subject to PRA permission, to assign risk weights that are different to the treatment set out in Article 122(5) of the Credit Risk: Standardised Approach (CRR) Part, to exposures to corporates for which a credit assessment is not available from a nominated eligible credit assessment institution (ECAI) ('unrated corporates'). The PRA will only grant a permission to use the risk weight treatment set out in Article 122(6) of the Credit Risk: Standardised Approach (CRR) Part where a firm demonstrates, to the satisfaction of the PRA, that the criteria specified in Article 122(6) of the Credit Risk: Standardised Approach (CRR) are met. The PRA's expectations in respect of these criteria are outlined below.

3A.2 A firm applying for a permission for use of the risk weight treatment under Article 122(6) of the Credit Risk: Standardised Approach (CRR) Part must demonstrate, to the satisfaction of the PRA, that it has sound, effective and comprehensive strategies, processes, systems, and risk management practices. These must enable the firm to identify and manage its sources of credit and counterparty risk adequately, and therefore enable it to robustly distinguish between investment grade and non-investment grade unrated corporate exposures.

3A.3 For the purpose of determining if these requirements are met, the PRA will consider whether: