Credit ratings: Emerging in the emerging markets
An intimate knowledge of the market, a good track record and a favourable cost basis – what more could a credit rating agency ask for?
Well, for starters, it certainly helps to have a high profile. With this in mind, four regional rating agencies operating in emerging markets – JCR-VIS Credit Rating Company, Pacific Credit Rating Company, European Rating Agency and Global Credit Rating Company – have come together to create a localized group that spans the emerging markets from Africa, eastern Europe, Latin America and Asia. The International Ratings Group (IRG) – as the tie-up is called – hopes to establish itself as a household name for ratings on the periphery of the capital markets. In fact, it aims to become market leader, expecting growth of existing members to grow their business and additional agencies to join. As befits a global brand, a single methodology and unified rating scales are being established, with the group hoping to benefit from pooling their expertise.
But how is the group going to compete with the big players such as S&P and Moody’s? According to Richard Wilson, managing director of IRG, it won’t in fact engage in direct competition. “The big credit rating agencies have moved out of the emerging markets to an extent,” he says. “They tend to focus on the developed markets, where the return on investment is better for them.