DOHA: The newly launched GCC regional credit rating scale by Standard & Poor's (S&P) will help develop the local credit culture in Qatar and other GCC countries, said the Head of S&P Middle East.
"We have seen countries that we have developed national scales or regional scales is that it helps creating a credit culture in providing more transparency and getting more companies to actually go through such an independent rating process," Jan Willem Plantagie told reporters here yesterday.
Jan and Torsten Hinrichs, MD and Head of S&P EMEA were in Doha as part of a Gulf wide tour to present the S&P's GCC Regional Credit Rating Scale, designed to allow investors to better compare the relative creditworthiness of regional issuers and issuances.
Jan said the GCC regional scale ratings is being offered based on the feedback from S&P customers and because of several other factors. The GCC and its member countries are taking steps to develop their local and regional capital markets. The proposed GCC Monetary Union and the development of a regional yield curve based on increased sovereign issuances are some of these factors.
He said the GCC regional ratings and the GCC regional scale may provide a helpful basis of comparison for credits affected by these and other measures and could encourage broader regional market participation. will feature the identifying prefix 'gc'. The GCC scale features both long and short-term ratings. The highest long-term rating is gcAAA and the highest short-term rating is gcA-1+.
GCC regional ratings are designed to serve as an independent benchmark and information tool for investors. They, and the GCC regional scale, may provide a complementary tool for rating local or regional currency issuance alongside the global ratings used for rating non-GCC currency denominated issuers and issuances.
GCC regional ratings and the GCC regional scale are designed to meet the needs of investors participating in national or regional GCC capital markets by providing finer distinctions of credit quality. Investors may use GCC regional ratings and the GCC regional scale to compare and contrast the relative creditworthiness of issuers and issuances in the GCC.
Torsten said the criteria used to analyze business risk, financial risk and other elements of credit risk are the same for both regional and global scale ratings.
"We are using the same analytical methodology. From analytical rigor, the involvement of our analysts is exactly the same. It is not second class of any description. It is the same analytically valuable product," he said. The GCC regional ratings may be useful to issuers, counterparties, intermediaries, investors and insurers seeking credit ratings on GCC issuers and issuances relative to other issuers and issuances within the region. GCC regional ratings might be used for traditional capital markets debt and bank loans as well as for Shariah-compliant obligations.
By Nasser Al Harthy
© The Peninsula 2010
