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14.04.2010
Credit-Rating: Increase in Number of Authorized Rating Agencies Shall Be Accompanied by Strengthened Supervising
Credit-Rating believes that rising competition in Ukraine’s market of rating services following the increase in the number of authorized credit rating agencies shall not jeopardize high standards of rating activities.
The Ukraine’s existing legislative requirements towards authorized credit rating agencies do not meet international standards – primarily in terms of an agency’s track record in issuing and maintaining credit ratings. The US Securities and Exchange Commission requires that the applicants for the status of authorized rating agencies shall prove that they have a continuous experience in assigning and maintaining credit ratings during no less than 3 years before application. The Ukrainian requirements allows for providing the status of authorized credit rating agency to entities, which do not have practice in issuing and maintaining solicited credit ratings. Moreover, the supervisory system does not allow for efficient controlling the quality of their activities and impartiality of their assessments. In these circumstances, new players that are not recognized in the market and do not have an adequate track record, may attempt to enter the market by issuing high ratings to the companies, which were previously low rated by other agencies. Such activities may substantially hamper efficient use of credit ratings in Ukrainian financial market, for the status of authorized credit rating agency may not guarantee adequacy of rating assessment.
In the circumstances where legislative requirements does not allow for meeting high standards by new authorized credit rating agencies, a significant role is played by the reputation of rating agencies and efficiency of their self-regulation systems. In Credit-Rating’s view, the users of credit ratings, which employ the ratings for making investment decisions should themselves assess ability of certain credit rating agencies in performing high-quality and independent analysis for issuing credit ratings. An important role to this extent is played by agencies’ adherence to IOSCO Code of Conduct for credit rating agencies.
Credit-Rating thinks that the requirements for such agencies shall correlate with international standards accompanied by reinforced supervisory activities in the interests of development of rating services market and strengthening reputation of the system of authorized credit rating agencies. The regulator should pay primary attention to rating agencies’ procedures as to the staff, professional level and experience of the members of rating committee, and to procedures preventing conflicts of interest when issuing credit ratings.
Credit-Rating has been operating in the Ukrainian market starting from 2001 and is committed to issuing national scale ratings. Since 2004 Credit-Rating has been a credit rating agency authorized by the State Committee for Securities and Stock Market for assigning credit ratings to economic entities, regions and economy sectors.
Information on all credit ratings assigned in accordance with the National Rating Scale may be found in REUTERS and BLOOMBERG information systems.
For more information, please contact:
Information and
analytic department
Sergey Rozumyak +38044490 25 50
SRozumyak@credit-rating.com.ua
Denis
Rudenko
DRudenko@credit-rating.ua
