Siddique Islam
Standard Chartered Bank (SCB) has expressed its willingness to provide support for preparation of the country's credit rating.
"With SCB's heritage in Bangladesh market and experience in working with the rating agencies, it can contribute to the credit rating process of Bangladesh," Alamgir Morshed, Director, Head of Global Markets of SCB, Bangladesh, told the FE in an exclusive interview.
Alamgir also shared his views and insights on the issue that has already created a lot of enthusiasm in the financial market.
Highlighting the importance of credit rating, he said rating will reflect a unified credit story of Bangladesh to a wide range of international investors, and will allow investors to benchmark Bangladesh against peer sovereigns around the world.
However, it will provide an excellent opportunity to showcase Bangladesh's socio-economic landscape, he added.
"Bangladesh has made tremendous progress on the socio-economic front by any global standards and is recognised for its achievements by opinion leaders and analysts" the SCB official opined while explaining the sovereign rating methodology which broadly looks at social, economic and political factors of a country to assess a government's ability and willingness to service its debts.
He also viewed that in many fronts Bangladesh has credentials better than some of the B+ rated sovereigns. Average gross domestic product (GDP) growth of 5.5 per cent in the last five years, robust growth in exports and home remittances, rising trend of foreign exchange reserve and low debt service ratio are some of the commendable economic indicators of Bangladesh economy.
He also mentioned the reforms made by the policy-makers over the years, particularly privatisation initiatives, are also very convincing. "Above all, Bangladesh stands out in terms of its strong loan repayment track record," he added.
He clarified that country credit and sovereign ratings were two different parameters of risk measurement. However, the two are highly co-related since these are largely dependent on a country's government actions, the bank official observed.
Country credit rating is a broader concept as it measures the probability of default of cross-border lending or investment to a government, corporate or even an individual of a country; whereas, sovereign rating is a measure of probability of default of loan or investment to the government or its entities.
Sovereign ratings are provided by external rating agencies and the most respected are Standard & Poor's, Moody's and Filtch.
"With the implementation of Basel II, lenders and investors would be more dependent on external credit ratings for their investment decisions," he noted.
Private sector of Bangladesh, poised for massive expansion supported by robust economic growth, would require participation of a wider range of international investors and lenders, Alamgir said adding that these investors rely on sovereign ratings for their cross-boarder lending and investment decisions.
He also said a sovereign rating enhances the profile of the country and increases visibility of a country's private sector to the international community.
The bank official said there are many countries, which obtained sovereign ratings but did not issue any sovereign bond. It was obtained predominantly to assist the private sector to access the broad spectrum of international debt and equity market.
He lauded the role of the Bangladesh Bank and the Securities and Exchange Commission for development of country's debt and equity markets to bring in more depth in the local capital market.
The United Kingdom-based SCB with its over 100 years of experience in Bangladesh and risk appetite, evidenced by one of the largest balance sheet of billion US dollar, will be able to present "Bangladesh story" of immense untapped potential effectively from a credible foreign investor's point of view, Alamgir observed.
Currently, SCB's wide range of services in Bangladesh, include personal and corporate banking along with institutional banking, treasury and custodial services.
The bank has branches in six cities, including one offshore banking unit inside the Dhaka Export Processing Zone at Savar.
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