January 20, 2005 | Cbonds
|The rating initiative should come from the bond issuer, believes Alexander Sulaev, head of investment business department at UkrSibbank (Kiev). “It is necessary to realize that the main purpose of rating obtainment for the issuer lies in his - and not somebody else’s – will to attract investor attention to its bonds”, - he said in the interview to Interfax-Ukraine agency. |
In Slulaev’s opinion, by obliging all bond issuers to obtain ratings, the State is once again trying to apply non-market administrative methods in securities market development.
The State Committee on securities and stock market approved a decision to introduce mandatory rating obtainment for all bond issuers. Sulaev believes it will become an inhibiting factor “especially on this stage, when the debt market in Ukraine is still on the early stage of development”. He attributes it to substantial increase in issuers’ expenditures in the process of bond issuance, which will make the debt market less attractive for them.
Besides, Sulaev emphasized, the quality of ratings assigned by Ukrainian agencies is currently acknowledged neither domestically nor abroad.
He also reminded that some of bond issues are not meant for circulation on the public market, but have to be registered as open issues due to peculiarities of local legislation. That is why, in his opinion, introduction of mandatory ratings will limit operations of such issuers.
Head of investment business at UkrSibbank suggested a number of measures, which could stimulate formation of the rating scale, instead of enforcing it. Some of the proposed measures are acceptance in listing of only rated securities; introduction of mandatory ratings for government and municipal issuers; reduction of banks’ limits for securities with certain ratings, or permission to certain investors (pension funds, savings banks) to buy bonds with certain ratings, etc. “There are a lot of alternatives, and it is necessary to work on them in cooperation with market, without obtrusion”, - Sulaev said.
As reported earlier, the State Committee on securities and stock market obliged Ukrainian bond issuers to submit information on the issue rating to the committee in the process of the issue registration, and to renew the rating quarterly during the entire course of its circulation. The decision was made on December 8, 2004, registered by the Ukrainian Ministry of Justice on December 30, 2004, and came into force on January 10, 2005.
On August 19, 2004 the Committee already held a tender in order to select authorized rating agencies. It selected Credit-Rating (Kiev), which so far remains the only authorized agency in the country.
Based on Interfax-Ukraine data