Global Credit Ratings optimistic about the future as rating agency playing fields are leveled
Global Credit Ratings (‘GCR’) is optimistic about the future of rating agencies despite the credit crisis. GCR’s structured finance head, Alfons Ideler noted that, “the playing field is more level than before the credit crunch and market participants now look outside of the international rating agencies, dispelling the perception that only the big three agencies have the skills to get the job done. This makes the rating agency space more competitive”.
GCR is exploiting their motto, ‘local presence, local knowledge’ and through their Johannesburg based head office GCR have grown their structured finance portfolio substantially over the past several years. ‘We’ve always provided good credit analysis coupled with a high level of service, and can demonstrate a good track record. More and more we are being considered alongside the big three agencies.’
The competitive landscape of rating agencies is likely to further improve as governments step up regulations, which will dictate the requirements under which rating agencies operate. Overseas regulators are very busy with this and the expectation is that South African regulators will follow suite and step up the pace.
‘Supporting the requirement for rating agencies is the need for credit analysis, especially in Africa,’ notes Ideler. In order to open up financial markets in Africa, ratings can be a useful tool to get investors interested in the region, as most investors don’t have the time or resources to look at every single corporate name or transaction. GCR is in an excellent position to take advantage of this, as the agency continues to penetrate Africa through their network, supported by their two shareholders DEG and Proparco, two big European Development Finance Institutions.
GCR offers a full service of ratings in structured finance, banking, corporate, municipalities and insurance sectors. In the structured finance space, the team continues to publish criteria reports, which describe the rating approach, to make the rating process more transparent for all market participants and consistent across all transactions. The content of the criteria reports is short and focused on key aspects. “This will increase readability and understanding,” concludes Ideler.
