May 3rd, 2015
Rt Russian – Translated – Joaquin Flores
Russia decided to create it’s own rating agencies for its industries. A Stratfor expert on economics, Mark Fleming-Williams believes that by doing so, Moscow will be able to reverse the situation where 96% of all credit ratings are made by Western organizations, which impact the cost of loans for Russian companies.
Experts from the American research company Stratfor predicted the success of the Russian and Chinese rating agencies. This was stated by the economist mark Fleming-Williams in the report, which aired on InoTV. Russia already has a national rating Agency “Rus-Rating”. According to Williams, this is important for two reasons.
“First, industry in fact, sets the tone throughout the investment management industry, that is, it determines whether the investors should buy stocks and bonds or not. Industry credit ratings to a large extent decide whether this or that company is stable or not, and how likely is it to default. As a result, if a credit rating agency lowers the rating of the securities, the cost of obtaining credit for the company increases. The second reason this is important, especially for Russia, is that right now 96% of the credit ratings of the Russian companies are done by three American agencies”, — he explained in his position as an expert.
Recently Standard & Poor’s and Moody’s downgraded the sovereign credit ratings of Russia. It also lowered the ratings of many Russian companies. “For the government of the Russian Federation, things are not terrible. The country’s debt in relation to GDP is only 13%, which is very small compared with other countries,” explained Williams.
Alternately, there is the situation with the bonds of corporations and banks. Their debt is $500 billion, and is kept mostly by Western investors. Russia has begun to look for other sources of funding, turning to the East. “Over the past five years, Russia asked for money from China. China, as we have seen, increasingly invests in development projects across Russia”, — said the economist.
“The Chinese financial management industry in the next five years is expected to grow by six times. They have a huge and growing amount of capital that can go into something, like Russian bonds, as they currently seem to be very cheap due to the fact that all Western investors withdrew their money,” explained Williams.
According to his forecast, the credit rating industry will reflect what is happening in the industry of finance management. As the money will come from such areas as China, agencies in China and Russia will gain more and more trust as they increase their effectiveness and become more visible.