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22.11.2010
Credit-Rating Proposes Setting Ethical Standards To Prevent Unfair Competition In Rating Services Market
Credit-Rating, a nationally recognized credit rating agency in Ukraine has today announced that outcomes of activities of credit rating agencies authorized anew, namely IBI-Rating, Rurik, and Expert-Rating, represent unfair competition in the rating services market. During the past 6 months the three credit rating agencies have assigned credit ratings to certain companies and banks, which earlier bore ratings from Credit-Rating. In all these cases a drastic overrating (by up to 6 notches) produced by the new participants of the market has taken place. In the majority of the cases the overrating resulted in fact that companies and banks that earlier had low speculative grade ratings, have been assigned investment grade ratings by the new authorized agencies. Credit-Rating deem necessary to advise investors to attentively investigate into distortions between ratings by researching ratings represented in web-sites of different credit rating agencies.
Credit-Rating express their doubts concerning the fact that higher ratings from new players may only be explained by imperfections in their methodologies that have not been time-proven. New market players try to compete with the market leader by attempts to publicly discredit it and by providing potential clients with prior guarantees of assigning high credit ratings. Credit-Rating call for its competitors to take more prudent approaches in both creating demand for their services and building their reputations. The new market players should realize that their ratings may serve as credible instrument for national and foreign investors only if the agencies are deemed as reliable institutions that adhere to high prudent and ethical standards in conducting their activities.
In order to prevent unfair competition and to raise confidence of market players to credit rating agencies in Ukraine, Credit-Rating propose all participants of rating services market to adopt Memorandum On Ethical Standards, which is based upon fundamentals of IOSCO Code of Conduct for Credit Rating Agencies. Credit-Rating deem the following ethical standards the most important for the present stage of development of rating services market in Ukraine:
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A credit rating agency and its employees should not, either implicitly or explicitly, give issuers any assurance or guarantee of a particular rating prior to a conclusion of a contract and to a completion of a rating assessment;
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The credit rating an agency assigns should not be affected by the existence of or potential for a business relationship between the agency and the rating’s bearer (or its affiliates);
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The employees of a credit rating agency involved in rating analysis should not take part in negotiating commercial terms with the agency’s customers;
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A credit rating should be determined by a rating committee of an agency, not by a single employee.
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In offering rating services a credit rating agency should be assured it has sufficient number of qualified experts to conduct a rating analysis of a high quality.
The full text of memorandum may be found in Credit-Rating’s web-site www.credit-rating.ua, and has been sent for examination and signing by all authorized credit rating agencies in Ukraine.
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:
Department for
Information and Communications
Sergey Rozumyak +38044490 25 50
SRozumyak@credit-rating.com.ua
Denis
Rudenko
DRudenko@credit-rating.ua
