rating agencies. The Central Bank issued licenses to two rating agencies Rating agencies in the financial market
Credit ratings assigned to banks by international rating agencies make it possible to judge their creditworthiness, financial stability, reliability and reputation. For ordinary consumers of financial services, these indicators will probably not say much, but for the credit institutions themselves, this assessment is very important, it determines the credibility of a financial institution, the possibility of attracting borrowed funds and the conditions for obtaining loans. In general, based on the ratings, investors will make their decisions. And, ultimately, these financial decisions will determine at what price banks will lend to their customers.
Among the most authoritative international rating agencies, three largest companies should be singled out: Moody's Investors Service (Moody's), Fitch Ratings and Standard & Poor's (S&P). Each of them assigns its own ratings to banks on a national and international scale: long-term and short-term credit ratings, bank deposit ratings, bank financial strength ratings, etc.
Each agency has its own rating scale, which has letter designations, usually from "AAA" to "D". In addition, the modifiers "+" and "-" or the numbers 1, 2 and 3 can be added to the letter categories if the bank falls into intermediate values. To show a possible change in the rating in the future, the agency's forecast is used. It can be: "Stable" - this means that the rating is not expected to change in the next couple of years; "Developing" - the rating can both increase and decrease; "Negative" - a downgrade is possible; “Positive” – rating upgrade is possible.
| Moody's long-term credit rating | Long-term credit rating Fitch Ratings | S&P long-term credit rating | Symbol designation |
| Aaa | AAA | AAA | Exceptionally high quality debt with minimal credit risk |
| aa | AA | AA | The ability to repay debt obligations is very high |
| A | A | A | The level of creditworthiness is high |
| Baa | BBB | BBB | The level of creditworthiness is satisfactory |
| Ba | BB | BB | Insufficient level of creditworthiness, adverse economic conditions may affect solvency |
| B | B | B | Debt liabilities are subject to high credit risk |
| Caa | CCC | CCC | Danger of default, debt repayments dependent on favorable economic conditions |
| Ca | CC | CC | Serious difficulties with the payment of debt obligations, close to default. |
| C | C | C | Debt payments continue, but default is inevitable |
| - | - | SD | Default on individual obligations |
| D | D | D | Default declared |
Rating is paid service. After concluding an agreement with the selected rating agency, the bank must provide the company's analysts with all the necessary information about its activities. After that, a rating meeting is organized with representatives of the management of the credit institution. Based on the assessment of all received data, the rating committee makes a decision on assigning a rating. If the client does not agree, then he can file an appeal, providing additional information. It should be noted that the bank makes the decision to publish the rating at its own discretion.
Taking into account the fact that rating agencies have different approaches to assessing the factors that determine the position of the bank, and have their own specifics, many credit organizations apply to several rating agencies at once. After all, the reputation of the bank in the domestic and international financial markets largely depends on this.
When compiling ratings for banks, financial companies, business structures, we often rely on data published by reputable and respected rating agencies. Their assessments are listened to all over the world, and business and political decisions are made on their basis.
Today we present Top 10 Most Reputable Rating Agencies, both in the international and in the Russian arena.
10. National Rating Agency
This Russian rating agency was established in 2000 and accredited by the Russian Ministry of Finance. Specializes in assigning ratings to banks, non-bank credit institutions, insurance companies and non-state pension funds, as well as management and investment companies.
9.A.M. Best Company, Inc.
It is an international rating agency headquartered in Aldwick, New Jersey, USA. Main specialization - Insurance companies. The specificity of the assessment is to determine the financial strength rating, which determines how the insurer is able to fulfill its obligations to policyholders. The formula for calculating the rating is the property of the company
8. Dominion Bond Rating Service (DBRS)
The credit rating agency was founded in Canada in 1976. Today it is the largest Canadian RA. The existing scale of short-term debt ratings shows how big the risk is that the borrower will not be able to timely fulfill their own obligations on short-term debts.
7. Moody`s Interfax Rating Agency
The leading rating agency in Russia, where they are assigned according to the national scale, which reflects the agency's opinion on the creditworthiness of the issuer and its debt obligations in the national market. The services of Moody`s Interfax Rating Agency are used by Russian financial institutions, regional and municipal administrations, as well as non-financial sector companies.
6. RA AK&M
This Russian rating agency, accredited by the Russian Ministry of Finance, was established in 1994. In addition to the ratings of companies, the RA assesses the creditworthiness of the constituent entities of the Russian Federation and municipalities. AK&M also ranks the leading enterprises of the Russian Federation.
5. "Expert RA"
One of the most authoritative rating agencies in Russia. It is an information and research division of the Expert group of companies. Founded in 1997 The agency compiles credit ratings of private companies, credit ratings of regions and evaluates their investment attractiveness.
4. Morningstar (NASDAQ: MORN)
American RA specializes in the collection and analysis of information on investment funds. Databases, training courses, surveys and software are provided to consumers. The fund rating system is based on the assignment of stars (from 1 to 5), which allows you to summarize the data on the stability of the fund in terms of the ratio of return and risk.
3. Standard & Poor's (S&P)
Agency engaged in analytical research of the financial market. The company is one of the three most influential international RAs. The American stock index S&P 500 and the Australian S&P 200 were created by this company. The Agency evaluates both issuers and individual debt obligations. The international scale Standard & Poor's allows you to compare the reliability of issuers and obligations of different countries.
2. Moody's
One of the most authoritative in the world international. PA is a subsidiary of Moody's Corporation. The agency is engaged in research and risk analysis, assignment of credit ratings. More than 4,500 employees work in Moody's offices in 26 countries around the world.
1. Fitch Ratings
This international diversified corporation has gained fame precisely as a rating agency. Back in 1924, the Fitch agency introduced a rating scale from "AAA" to "D". Today, the company's mission is to provide independent and future-oriented credit ratings, insights and research to global markets.
Welcome traders to the ForexLabor website. Economics, loans, accounts, record keeping, all this accompanies not only ordinary people, such as we are with you, but also entire states, only on a large scale. In order for a person to be given a loan at a bank, all the necessary information is collected about him in order to assess his solvency. It is beneficial for the bank to have the money returned to it, and at the same time, preferably with interest.
The best, in my opinion, broker - for day trading, for scalping.
It is exactly the same with states, only private investors and investment funds act as bankers for the state. But how can they know whether they will receive a profit if they invest their hard-earned money in a particular country. Will the business be shut down, or what is quite realistic in some countries, will they be nationalized. To assess these and many other risks, as well as the level of solvency are called international rating agencies .
What is a rating agency?
At its core rating agency is a company that produces a specific product. The commodity is the assessment of one or another subject of the world market economy, their commodity is the hard work of hundreds of analysts with many years of experience who can distinguish a potential bankrupt from a promising enterprise by analyzing their official and not very reporting.
Rating agencies Although they are commercial companies, states are often the initiators of their creation. Co-founders often include consulting firms, news agencies, and financial institutions. In order to make the work of the rating agency independent, control over its activities is distributed among the participants in such a way that none of them has a decisive vote or the ability to single-handedly influence the most important decisions of the company's management.
Before delving into this topic further, it is worth saying right away that the assessments and ratings that agencies give are not a 100% guarantee of the solvency of the research object. Rating agencies make no guarantees and never tell anyone about their rating method.
Who usually orders the services of rating agencies? In most cases, various countries and companies that work in the financial field act as the customer. The presence of a rating from one of the well-known agencies allows companies and customer countries to inspire more confidence among potential investors, and thus attract more money.
What exactly do rating agencies evaluate?
As has been repeatedly said, rating agencies evaluate the solvency of the issuer of debt obligations, giving him an appropriate assessment. Roughly speaking, they are checking a country or a company to see if they can repay debts or not. In addition, some ratings indicate whether principal and interest obligations will be repaid.
The higher the so-called credit rating , the more reliable the object being evaluated is for investing in it. The most reliable securities in the world are US Treasury bonds, they are assigned the highest rating, the classification of which we will talk about a little later.
Disadvantages of rating agencies
Before 2008, designate disadvantages of rating agencies it was not fully possible, since there were practically no precedents that cast doubt on the competence of the staff and the unreliability of the assessments of international rating agencies. But it was 2008 that changed everything.
Leading rating agencies failed to foresee the US real estate crisis and the collapse of corporations such as AIG, Enron, Lehman Bros., Parmalat and many others. This dealt a significant blow to the reputation of appraisal companies, and significantly undermined the credibility of their activities.
Because of this crisis, the main problem of rating agencies was revealed - slowness. Grading sometimes does not keep pace with the dynamically changing global economic environment.
Based on this, the object that is being assessed may become an unreliable borrower until a rating is assigned. Or, on the contrary, the financial condition of the company may become more attractive, and it will receive a rating lower than it should have been set, but this is not as bad for investors as the previous option.
Notable rating agencies
- Fitch Ratings;
- Moody's;
- Standard & Poor's;
- Morningstar;
- A.M. best company.
Each company has its own specifics and methodology for setting ratings. Of these five companies, as the most reliable and influential, I would single out three: Standard & Poor's, Moody's and Fitch Ratings. Let's talk about them in more detail.
Standard & Poor's
Also known by the acronym S&P. Many people recognize her because this rating agency is the founder of such powerful stock indexes as S&P 500 in the USA and S&P 200 in Australia.
Many serious private investors, financial institutions and even countries consider this company one of the most 
authoritative in the world and sometimes rely entirely on the results of their research in making critical decisions.
Standard & Poor's has been in existence for over 150 years and is involved in credit ratings, stock index editing, and risk management research.
From the latest ratings, it can be noted that not so long ago, the company downgraded Ukraine's credit rating from CCC to CC and changed its outlook from stable to negative. In essence, this means that there is little or no investment in the country, and the country has no way to pay its obligations, let alone pay interest. It is worth noting that such a low rating was given despite Ukraine receiving impressive loans from the IMF and the EU to stabilize the economic situation.
Moody's
The Agency has a permanent staff of experts in the amount of 4500 people. The company has more than 26 representative offices in various countries peace. Distinctive feature company is that after receiving an assessment, the agency leads a particular company for a certain period, its duration is agreed upon separately at the time of conclusion of the contract. After this period, Moody's either changes the previously set rating, or leaves it at the same value. 
If the client company cooperates with Moody’s for the first time, then in this case the expert group holds an initial meeting with the management of the client company to review and transfer a list of those documents that will be required for the analysis. Sometimes some documents are already available, as they do not differ from those that are prepared for management on a quarterly basis.
This company also rated Ukraine, but a little earlier. Moody's downgraded Ukrainian bonds in 2012. There were several reasons for this: the cessation of publication of NBU reports, the lack of success in reforms and agreements with the Russian Federation on gas, the unpredictable political situation and administrative interference in the activities of the international Forex market. As a result of all these actions and inactions, the bond rating fell from B2 to B3.
Fitch Ratings
The foundations of the company were laid in 1913 with the Financial Statistics Publishing House. Over time, all this has grown into an independent rating agency, whose estimates are trusted all over the world. Now Fitch Ratings employs about two thousand people in more than 50 countries around the world. 
Fitch Ratings is the first company to be recognized by the US National Securities Commission and licensed by the NRSRO. This agency is known, among other things, for issuing two very important ratings: Short-term Issuer Default Rating and Long-term Issuer Default Rating (RED) for short.
A short-term RED is assigned to a subject economic activity, which must fulfill its obligations within a certain grace period (from 1 to 3 years).
How do rating agencies assign ratings?
Assigning a rating is a complex research activity. Rating agencies evaluate many variables such as: financial stability, the ability to pay bills, the state of property, profitability and business activity.
Each of these variables includes several more. For clarity, take a look at the figure below.
This is a simplified scheme, an example of the valuation of a conventional enterprise. Of course, as already mentioned, the agencies do not disclose the methodology of their work. In addition, the evaluation algorithm may differ depending on what is specifically evaluated.
The evaluation algorithm itself looks something like this: The rating agency and the customer company enter into a contract for the provision of services. Further, at the request of the agency, the company provides all the necessary information, this may also include an interview with the company's management.
After collecting information, studies are carried out and on their basis, the company is assigned a preliminary assessment to the customer. The agency informs the company about the results of its work.
- The customer agrees with the rating. A press release is issued, the rating is published in official publications.
- The company disagrees with the results. A non-disclosure agreement is signed, the documents are never made public.
Rating classification
An investment rating means that an economic entity is reliable and able to fully pay its debt obligations. Investors are more willing to invest in the economies of countries with an investment rating. Highest value investment rating is AAA, few have it, for example, US government bonds. BBB is considered the lowest investment rating, the investment attractiveness of the holders of this rating is quite high, but the economic situation may change, which suggests that the investor should be careful.
A speculative rating is no longer good, even at the highest BB. States and companies with a rating of this class pay high interest on obligations. In addition, investment companies have severe limits on the amount of funds that can be invested in issuers with a speculative rating.
A positive outlook means that there may be an improvement in the current situation over a period of 3 to 6 months.
A stable forecast means that there is no need to expect improvements, but a serious deterioration in the situation in the next six months is unlikely to happen.
Negative - speaks for itself, it is quite possible that the issuer with such a forecast will worsen the situation.
Rating scale of international rating agencies
|
Moody's |
Standard & Poor's |
Fitch Ratings |
Reliability level |
| AAA | AAA | AAA | Maximum Reliability |
| AA1 | AA+ | AA+ | High reliability |
| AA2 | AA | AA | |
| AA3 | AA- | AA- | |
| A1 | A+ | A+ | Above average reliability |
| A2 | BUT | BUT | |
| A3 | BUT- | BUT- | |
| BAA1 | VVV+ | VVV+ | Below average security |
| BAA2 | VVV | VVV | |
| BAA3 | VVV- | VVV- | |
| BA1 | BB+ | BB+ | Speculative level |
| BA2 | BB | BB | |
| BA3 | BB- | BB- | |
| IN 1 | B+ | B+ | Highly speculative level of reliability |
| IN 2 | AT | AT | |
| AT 3 | AT- | AT- | |
| CAA1 | CCC+ | Significant risks | |
| CAA2 | CCC | Extreme Speculative Level | |
| CAA3 | CCC- | CCC | Pre-default state |
| SA | SS | ||
| FROM | |||
| FROM | AT | DDD | Default |
| DD | |||
| D |
The role of rating agencies in the global economy
Rating agencies are one of the most important organizations in the global economy. I don't think you will argue that modern world would not have been possible without investment. Rating agencies help investors invest in more reliable companies and warn against "garbage", thereby filtering the economy from non-competitive players, leaving the strongest in the market.
From news sources, investors periodically draw information that the rating agency raises or lowers the rating of an issuer, and with a review for an increase or decrease. The market reaction to this kind of news background can be quite violent. Therefore, every trader must understand what rating agencies are and what they do. In this article, we will tell you about both.
The purpose of rating agencies
Rating agencies, as the name implies, establish credit ratings that characterize the level of credit risk (solvency) of both individual issues of debt obligations and issuers - individual companies, municipalities and even countries. These ratings are assigned by highly qualified analysts of rating agencies based on certain mathematical models or analytical studies that involve a certain amount of subjective judgment based on the experience of the analysts themselves.
For issuers: having a higher rating (or having one at all) makes it easier to enter the capital market and allows you to raise funds at a lower interest rate.
. For : ratings help to orientate on the acceptability / unacceptability of a particular issuer / issue for investment Money This factor is very relevant, given the country specifics for international investors.
. For investment banks organizing the issue of the issuer's debt securities: the presence of a rating makes it possible to implement the issue at the least cost. Moreover, many institutional investors (for example, funds) make their investments in accordance with investment declarations, which often require a rating from certain agencies.
Rating agencies are commercial organizations that receive their profit both from investors - for providing them with up-to-date information on the credit risk of a particular issuer / issue, and from issuers of securities to which these ratings are assigned. Moreover, ratings are not only assigned, but also subject to revision, as a result of which the “status” of the ranked one may change, and this, in turn, requires the agency to constantly monitor the issuer. It is worth noting that rating agencies (usually on a paid basis) issue various analytical reviews for their subscribers on markets of interest to investors - for example, on the credit ratings of bond issuers.
"Big Three" rating agencies
For a rating agency to work successfully, investors must trust it. This requires a certain reputation, which has been developed over decades. Therefore, there are not many truly global and successful rating agencies in the world. The best of them form the so-called "big three", which includes S&P global ratings, Moody's Investor Services and Fitch Ratings.
The history of rating agencies was started by Henry Poore (founder of Standard and Poor's), who published his research on this subject in 1860. S&P Global Ratings currently operates in 28 countries around the world. John Moody (the founder of Moody's) presented his research to the world only in 1900. Currently, Moody's assigns its ratings to 110 sovereign states, 11,000 corporate issuers, 102,000 valuable issues. The Fitch Ratings agency began its history in 1913 - with the founding of Fitch Publishing Company by John Fitch. After that, the agency was formed to its current state through a series of mergers. Moreover, historically Fitch also has European roots, hence its primary specialization in Europe and Asia (compared to S&P and Moody's).
There are also rating agencies in Russia - these are RIA Rating, Rus-Rating, the National Rating Agency (NRA), AK&M PA, however, the world's largest funds are less guided by information received from these agencies. Nevertheless, the ratings of these agencies may be more adequate and specialized for Russian reality.
rating scales
Rating agencies assign both long-term and short-term ratings. Traditionally, all ratings are somewhat similar to each other and are divided into only two categories: investment and speculative. In addition, ratings can be positive, negative, or stable outlook. For the S&P agency, the investment category includes ratings from AAA to BBB-, and the speculative category - from BB + to D. Moreover, the gradation of ratings from AA to CCC can be expanded with + and - symbols with additional elements of the characteristic.
For Moody's, investment grade ratings range from Aaa to Baa3, and speculative grade ratings range from Ba1 to C.
For Fitch, Investment Grade ratings range from AAA to BBB, and Speculative Grade ratings range from BB to D.
Conclusion
Pavel Samiev "Atlas of insurance"
The new rules for the placement of insurance reserves, recently published by the FSIS, use the credit ratings of banks when calculating the limit on investments in banking instruments. From July 1, 2006, insurers will be able to cover reserves with investments in bank deposits for 40% of the total amount of insurance reserves, if the respective banks have high ratings from Stadnard & Poors, Moody's, Fitch or Russian rating agencies. Otherwise, investments in deposits are limited to 20%. In the placement rules own funds, which are also due to be approved soon, similar requirements are imposed on investments in banks. The main question that has arisen for both insurers and banks is: which Russian rating agencies will be recognized by the FSIS, and how to compare the scales of Russian and international agencies
Before answering these questions, let's turn to the history of ratings in the world and Russia and try to understand whether the statement that rating culture is alien to us is true, how "international" agencies are truly international, and, finally, how ratings are used in regulation.
A bit of history
The last 20 years have been marked by the rapid development of rating activities in almost all countries. If in the late 80s. there were no more than thirty rating agencies in the world, and rating activity was actually developed only in the USA, now there are already more than 100 rating agencies in the world. Since the emergence of the first rating agencies in the US at the beginning of the century, rating culture has remained an exclusively American feature. In this country, it has become commonplace for issuers to receive ratings. In European countries and Japan, the rating remained exotic for a long time and was assigned mainly to the largest companies with international operations. However, since the late 1980s began the rapid development of rating activity in the world, which in the past few years has turned into a real boom. According to a study by the rating agency Fitch, now about 80% of the world's cross-border debt capital flows are controlled by ratings. And this is not the limit.
The "rating boom" is a consequence of the globalization of financial markets, the formation of a large single economic and monetary area, and the development of information and communication technologies. In addition, ratings are increasingly being used to regulate the capital market. Many rating agencies in the world, including Expert-RA, are authorized agents of regulatory bodies. Finally, the most important regulatory document of the banking market - Basel-2 - also widely uses ratings to calculate capital adequacy, taking into account the risks of specific borrowers. There is a need to standardize a variety of debt financial instruments, create an adequate risk assessment system for managing an investment portfolio, and credit ratings are designed to satisfy this need. After all, ratings are one of the most convenient and effective ways solving the problem of information asymmetry.
For obvious reasons, Russia joined this process somewhat later than other countries. However, even now the rating in our country is beginning to acquire classic features - both in assignment and use. It is no secret that until recently the main function of the rating in Russia was exclusively PR. Ratings were practically not used when making investment decisions, for analyzing a counterparty when concluding transactions, and for assessing credit risks in financing. In addition, not every financier (let alone citizens inexperienced in economic matters) distinguished a rating (an assessment of the reliability and probability of fulfilling obligations) from a ranking (ranking on a quantitative basis).
Through the eyes of an American investor
The rating market in Russia, of course, is still rather poorly developed. And as often happens, it is widely believed that only large global agencies (S&P, Moody's, Fitch) will be able to work on it. This statement, to put it mildly, is debatable. The so-called "international" rating agencies essentially represent a look at borrowers and issuers from North American institutional investors.They do not sufficiently take into account national specifics in developing countries.In this regard, the Asian currency crisis was a major lesson for the world rating practice, as it showed that the largest rating agencies, whose history goes back almost a hundred years, were really not ready for rating activities in emerging markets.One of the main analytical sources for assigning a rating are the statistical databases of agencies on the ratio "rating level - the probability of default".However, these databases were compiled in developed markets, primarily the United States, and the Asian crisis actually confirmed , that these patterns do not apply in developing and transitional markets. Chaotic changes in the ratings of global rating agencies during the crisis only led to its deepening and faster spread to other regions.
The danger of misuse of the rating has been recognized by international organizations. New standards for regulating the activities of rating agencies are being developed. However, these standards are still under development and while the rating activity of global agencies still poses a threat. Of course, this does not at all indicate their lack of professionalism or insufficiently careful analysis. It just affects the specifics of the approach when assigning ratings.
In addition, the ratings of global agencies began to acquire more and more vivid political overtones. They are a powerful tool for influencing the financial system. A few years ago, a New York Times journalist wrote that after graduating cold war There are two superpowers in the world: the United States and Moody's. While the US can destroy almost any enemy militarily, Moody's is able to destroy a nation financially by assigning a low rating. This, of course, is a joke, but there is a large share of the harsh truth in it.
Of course, no Russian rating agency can boast of such a long history of work as, say, S & P or Moody's, but for working with partners in the domestic market, the ratings of national rating agencies seem to be more adequate and convenient. Users of ratings of national agencies are, first of all, domestic investors, for whom it is necessary to take into account national business practices, while users of ratings from Western agencies are American investors who are more accustomed to assessing enterprises around the world according to their own standards.For an American investor, of course, any sector of the Russian economy, if it is , say, non-ferrous metallurgy or oil industry, seems to be extremely high-risk and not suitable for investment.
Among other things, national agencies have a significant advantage in terms of the rating price: they usually have it from 3 to 30 thousand US dollars, while for global agencies - from 50 to 100 thousand US dollars. National rating agencies pay special attention to maintenance of a rating after assignment, which is less common in the practice of global agencies. In addition to ratings, national agencies offer a wide range of information and analytical services, that is, they follow the goal of creating an effective infrastructure for the financial markets in which they operate, and not the goal of selling a separate product; global agencies can't afford it to that extent, focusing more on international markets. National agencies have a deeper understanding of the specifics of specific markets, which leads to greater effectiveness of their assessments in these markets. But even more importantly, national agencies are fundamentally interested in developing the national debt market in order to expand their own business, and this is a significant guarantee of the quality and objectivity of their assessments.
First steps
The first Russian rating agencies in Russia began to appear immediately after the financial market began to take shape as a result of privatization. Their development continued quite successfully until the crisis of 1998, following the activation of the financial market, rather large volumes of trading in the stock markets. The significance of rating activities was recognized at the state level: the President of the Russian Federation even issued a special decree on the need to develop rating activities. The sharp decline in investment activity after the 1998 crisis led to a decrease in demand for information about Russian companies and securities. Many of the well-known rating agencies that existed before the crisis stopped their rating activities. However, ratings before the crisis were little like credit ratings in the classical sense (with the exception of a few credit ratings assigned by international agencies). In most cases, these were ratings closer to rankings or distance ratings (based on public information about the company), with a small set of estimated indicators.
The rating culture in the classical sense began to take shape in Russia only after the crisis, with the beginning of real economic growth and the growth of the loan capital market. It was only during this period that such concepts as "quality of corporate governance", "information transparency", and "company's reputation" began to acquire real significance for Russian companies. Issuers of debt securities and other active borrowers began to seriously think about the formation of a positive credit history in order to improve financing conditions in the future (including with the aim of attracting funds from foreign investors in the future). In 2001, a number of significant events took place in the Russian rating market. Then the Expert RA rating agency assigned the first credit ratings to insurance companies, a joint venture between the Interfax rating agency and the global rating agency Moody's was formed, and Standard & Poor's announced the takeover of the Russian rating agency EA-Ratings.
Russian rating agencies (as well as international ones) can be divided into two main types: these are universal and specialized agencies. Universal rating agencies issue ratings to various companies in both the financial sector and other industries, and in addition to this issue a number of other products of information and analytical content. These agencies include Expert RA, Moody's-Interfax, Russian divisions of international agencies. Specialized agencies analyze a certain segment (say, the banking market) and set ratings for participants in this market (examples - NAUFOR, RusRating, AK & M). "RusRating" agency in that they are based on the analysis of public information, and therefore it is difficult to attribute them to classical credit ratings.On the other hand, in world practice, cases of just such an approach to assessing financial stability are not uncommon.
When using ratings for regulatory purposes in Russia, two primary objectives need to be addressed: increasing the number of ratings assigned (in every market, rated companies should dominate) and selecting efficient and conscientious agencies. Here we finally come close to the question of which Russian rating agencies will be recognized by the FSIS. Apparently, the Ministry of Finance will accredit the agencies after a rigorous selection process. Main principle such selection should consist in assessing the sufficiency of resources for the agency to conduct a full-fledged rating analysis, independence and reputation in the professional community. "Expert RA" actively participates in this process, including developing the rules and norms of rating activity, cooperating with the FSIS. The comparison of rating scale models proposed in this article reflects the personal opinion of the author, based on the analysis of the methodology for determining the rating classes of various rating agencies. The table shows the national scale comparison for each agency (sovereign rating is not taken into account).
| Annex 1. Comparison of the rating scale of various agencies | ||||||
| Rating interpretation | A. M. Best | FITCH | Moody's | Standard & Poor's | weiss | "Expert RA" |
| Highest Reliability | A++ | AAA | Aaa | AAA | A+ | A++ |
| High reliability | A+, A | AA+, AA, AA- | Aa1, Aa2, Aa3 | AA+, AA, AA- | A, A- | A+ |
| Sufficient | A-, B++ | A+, A, A- | A1, A2, A3 | A+, A, A- | B+, | A |
| reliability | ||||||
| Acceptable Reliability | B+, B | BBB+, BBB, BBB- | Baa1, Baa2, Baa3 | BBB+, BBB, BBB- | B, B- | B++, B+ |
| Satisfactory reliability | B-, C++, | BB+, BB, BB- | Ba1, Ba2, Ba3 | BB+, BB, BB- | C+, C, C- | B, C++ |
| Low reliability | C+, C | B+, B, B- | B1, B2, B3 | B+, B, B- | D+, D, D- | C+ |
| Very low reliability | C-, D | CCC+, CCC, CCC- | Caa, Ca | CCC+, CCC, CCC- | E+, E, E- | FROM |
| Poor reliability/ Bankruptcy | E, F | D | C | CC, C, D | F | D |
Appendix 2
1. Objectivity and reliability. The rating methodology should be systematic and verifiable on the basis of historical data. Ratings must be reviewed periodically to reflect changes in financial condition borrower. The assessment methodology should be applied for at least three years.
2. Independence. The procedure for assigning ratings should be free from any external political influence or restrictions, economic pressure from the assessed institutions.
3. Openness and international access. For verification purposes, individual scores must be publicly available. Agencies are not required to evaluate firms in more than one country, but their results must be made available to foreign stakeholders under the same conditions as for residents.
4. Resources. The rating agency should have sufficient human resources to carry out a meaningful analysis and also to allow meaningful ongoing contact with the senior management of the institution being assessed.