New global rating firm ARC to start ops with India grading

Newly launched ARC Ratings today said it will kick off its sovereign operations with assigning ratings to India over the next four to six weeks.
India's Care Ratings holds 20 per cent stake in the new global credit rating agency, formally launched in January this year. The London-based ARC has five founding partners - ARC Ratings of Portuguese, Care, Global Credit Ratings from Africa, Malaysian Rating Corp and SR Ratings of Brazil.
"We are doing our sovereign analysis on India because it is the biggest market for us and it is going through critical times. We hope to kick off our rating assignment with India over the next four to six weeks," ARC Ratings Managing Director and Chief Executive Alexandra Mousavizadeh told PTI.

The agency is gathering views in the country and has already met Finance Ministry officials in Delhi and will be meeting Reserve Bank representatives this week. It will also be meeting corporates, academicians and think-tanks.
"There is a lot of optimism from business community that is expecting certain changes to happen (in India). But, there is caution as people are closely watching implementation of promises made by the new Government," she said.
Mousavizadeh felt there is an urgent need for Asia's third largest economy to get its investment grade rating improved as it is quite low.

About the methodologies ARC would be using while assigning sovereign ratings, Mousavizadeh said their approach is to look at rating metrics in a much more granular manner and take into consideration risk factors which other international agencies usually ignore.

"S&P, Fitch, Moody's (the big three on the global sovereign ratings scene, who have BBB- ratings on India) have one approach. They look at growth which is determined by GDP which is an old data set; they look at economic structure which is determined by GDP per capita.
"We believe these data prints are static, old, backward looking and don't say anything about the dynamism of an economy," explained Mousavizadeh, who spent 11 years at Moody's, handling their Africa sovereign rating portfolio.
"We have a whole balance-sheet approach. We are looking at internal balances which are the fiscal, corporates and banks and contingent liabilities. We are taking more risks that haven't been taken into account."

After India, ARC plans to assign sovereign ratings to Malaysia and Indonesia by December-end and Nigeria later.