Although global financial markets are dominated by the analysis and ratings issued by three major international rating agencies – Moody’s, Standard & Poor’s, and Fitch – there are over one hundred other agencies in fifty countries providing credit ratings,. Many of these local ratings agencies provide sophisticated and accurate analysis and reports, of a quality equal to that of their far better known competitors, and often with better levels of insight and understanding of local issues and information.
At the same time, following the financial crisis ratings agencies are under greater scrutiny than ever before, both by sophisticated and demanding market participants, and by regulators and legislators. This scrutiny poses major challenges not just for the largest agencies, but also more especially for smaller local agencies that may have difficulty following and adapting to international rules and requirements.
With the benefit of our experience of Moody’s and the other international agencies, we offer assistance in the following areas:
• Developing and refining ratings methodologies.
• Analytical ‘best practices’ and training for analysts.
• The rating process – internal rating decision-making and procedures; rating committee practices and management.
• Tracking, analysing, and reporting the accuracy of an agency’s credit ratings; the preparation of default studies.
• Ethical standards and structures for rating agency management and staff; managing conflicts of interest; handling confidential information; managing pressure from clients.
• The regulation of rating agencies: structuring regulatory requirements to improve agency standards and accuracy and to ensure high professional standards – contribute to more open and transparent local securities markets.
• Business planning for rating agencies; improving marketing and building market share.
• Corporate development for rating agencies; acquisitions and valuations.
• Working with clients: procedures for engaging with issuers.
• Working and communicating with investors; with the press.
• Writing skills for analysts; press releases and ratings announcements.
• Governance principles for the board of directors of ratings agencies: managing the special governance challenges of conflict of interest, communications and disclosure principles, outside pressure on the ratings process, and political and regulatory scrutiny or criticism.
In addition we offer ratings advisory guidance for selected companies:
• Identifying the credit issues that have been raised, or are likely to be raised, by ratings agencies.
• Understanding the changing methodologies used by the ratings agencies in their analysis and ratings assignments.
• The meaning of the agencies’ ratings grades and terminologies; differences between agencies’ ratings, analytical processes, and methodologies.
• First-time credit ratings – managing the process of obtaining initial ratings.