Rating agencies have a great power in their hands. Many investors rely on their conclusions when evaluating risks in securities. Attracting money is much more expensive for the borrowers with low ratings. The banks around the world, if the "quality" of bonds in their portfolios is reduced, have to create additional reserves, writes finmarket.ru.
The experts of the international rating agency Fitch threatened the Russian authorities that privatization of the state enterprises in Russia and CIS countries followed by a weakening of state support and declining share of state property to less than 50%, may lead to negative rating actions for approximately 60% of the rated state-owned companies.
This is why the dominance of American rating agencies (Standard & Poors, Moody's, Fitch) is frustrating for many world leaders. In Europe the idea of creating an independent European rating agency is increasingly promoted, and in Russia a proposal to create a rating agency EurAsEC was supported by Prime Minister Vladimir Putin.
The proposal to create a credit rating agency EurAsEC was made by the Director of the Institute of the New Economy of the State Management University, executive secretary of the EurAsEC Customs Union Commission, Sergei Glazyev. "This is absolutely right," said Putin at a meeting with the economists of the Russian Academy of Sciences on Monday, adding that there is a need to implement this proposal, RIA Novosti reported. In addition to creating rating agency EurAsEC, according to Glazyev, it is necessary to stimulate Russian rating agencies. "Not a bad idea," said the prime minister.
In turn, the finance minister Alexei Kudrin explained the use of data from international rating agencies by the Russian banks by the fact that they are often more objective. "The Central Bank, in my opinion, reasonably believes that the rating agencies are more tightly run, and ours are often pocket ones," he explained. However, Kudrin acknowledged that "this line is now getting increasingly blurred, but in general foreign agencies monitor their image and reputation more diligently".
The first Russian rating agencies in Russia began to appear immediately after the privatization which stimulated the emergence of the financial market. The value of rating activity has been recognized at the state level and the Russian president issued a special decree on the need of rating activities.
It is worth noting that the rating market in Russia is developed quite poorly. In turn, some observers believe that this statement is arguable. The so-called "international" credit rating agencies essentially look at the borrowers and issuers of the North American institutional investors.
In addition, the ratings of global agencies have become increasingly more political. They are a powerful tool to influence the financial system. Several years ago one of the New York Times reporters wrote that there were two famous superpowers in the post-Cold War world: the United States and Moody's. While the U.S. can destroy almost any enemy by military means, Moody's is able to destroy any country through financial means, setting the lowest rating. This, of course, is a joke, but there is a great deal of harsh truth to it. Obviously, none of Russia's credit rating agency can boast such a long history of work as, say, S&P or Moody's.
During the world crisis of 2008 the traditional rating agencies showed their incompetence by assigning high ratings to issuers and securities at a default level. As a result, the U.S. began to change the legislation to reduce the dependence on the ratings when making investment decisions.
In turn, the United States creates difficult obstacles to those trying to get out on its own market. Last year the U.S. Securities and Exchange Commission (SEC) denied a request of China's largest rating agency to become one of the officially recognized statistical organizations in the United States. According to Chinese analysts, by not allowing the Chinese rating agency Dagong Global Credit Rating Co. Ltd to enter the international market, the U.S. is trying to deny China the right to vote on global financial markets, writes inosmi.ru.