Credit Rating Agencies Plan Expansion To Se Asia

Domestic credit rating agencies are looking at possibilities of expanding their activities to Southeast Asian countries like Sri Lanka, Bangladesh, Thailand and Indonesia in an attempt to broadbase their business.

Investment Credit Rating Agency (Icra) managing director P K Choudhury indicated the idea is on the rating agencys agenda but would take some time before it finally happens.

We are looking at possible business in countries where big players like Moodys or Standard & Poor (S&P) would not enter. But, first we have to develop the confidence of investors there, said Choudhury. He said the move would take considerable time. It took Moodys and S&P nearly sixty years to grow into the size they are today, he said.

 

The Icra managing director said the rating agency is currently training the personnel of a Thai rating agency Sirida and have undertaken similar training programmes in Dhaka and Jakarta. However, officials at rating agencies pointed out that the practice of ratings is still in its infancy in the country. Investors still think that if an instrument is rated, their money is safe, the officials said.

There is a lot of expectation from a rating agency. But we are only trying to rate the probability of default, the officials said.

Rating in India is of recent origin, beginning 1987 when the first rating agency Credit Rating and Information Services of India (Crisil) was established, promoted by the Industrial Credit and Investment Corporation of India, nationalised and foreign banks. It has a tie-up with S&P. Icra was established in 1991, promoted by Industrial Finance Corporation of India (IFCI) and has a tie-up with Moodys.