Credit rating activities take a big leap forward
Thursday, 6 May 2010
Zubair Hussein
Moody's Investors Service announced its sovereign credit rating for Bangladesh as Ba3 on April 12, just a week after Standard & Poor's (S&P's) sovereign credit rating announcement of BB-. "The deficiencies in power, gas and physical infrastructure now besetting us are growth constraints for sure, but are at the same time investment opportunities as well," the central bank chief said while speaking at a seminar recently on sovereign credit ratings in the capital, Dhaka.
The governor urged the country's business community to take full advantage of sovereign credit ratings by forging partnership with foreign investors. Bangladesh is now truly in the club of Asian Tiger nations along with Vietnam, Indonesia and others, after the ratings. But there is pressing need to do what is necessary to further improve conditions to maintain and improve on the ratings such as removing the bottlenecks to ensuring steady supply of energy to the industries, developing befitting infrastructure to augment growth, bringing in necessary reforms and improving governance by institution building.
Ratings of the two global top agencies will be reviewed annually. The Standard Chartered Bank and the Hong Kong and Shanghai Banking Corporation Limited, known as HSBC, were advisors to the Bangladesh government for S&P's rating, while Citibank advised for rating from Moody's.
Meanwhile, the Malaysian Rating Corp Bhd (MARC) recently entered into a technical collaboration agreement with Emerging Credit Rating Ltd (ECRL) of Bangladesh. Under the agreement, MARC will assume the role of technical partner to ECRL, providing consultancy in the development of ECRL's credit rating methodologies and training in credit analysis.
ECRL is expected to tap MARC's rating experience and benefit from the latter's track record of providing credit rating services in Malaysia over the last 12 years.
ECRL is currently on the final leg of obtaining approvals from Bangladesh Securities and Exchange Commission for the purpose of obtaining a domestic credit rating agency license. At present, there are two domestic credit rating agencies in Bangladesh.
"There is vast potential for credit rating services in Bangladesh, a key driver of which has been local banking regulatory requirements such as bank loan ratings, mandatory credit ratings for initial public offering purposes and financial institution ratings under Basel II requirement," said MARC in a statement.
MARC chief executive officer Mohd Razlan Mohamed said this development was a testimony to MARC's progression in becoming a matured rating agency capable of providing and exporting our technical knowledge and capability to new start-ups.
ECRL managing director NKA Mobin said the collaboration would enhance ECRL's capability to provide its credit rating services in Bangladesh upon its expected commencement of operations in 2010.
Moody's Investors Service announced its sovereign credit rating for Bangladesh as Ba3 on April 12, just a week after Standard & Poor's (S&P's) sovereign credit rating announcement of BB-. "The deficiencies in power, gas and physical infrastructure now besetting us are growth constraints for sure, but are at the same time investment opportunities as well," the central bank chief said while speaking at a seminar recently on sovereign credit ratings in the capital, Dhaka.
The governor urged the country's business community to take full advantage of sovereign credit ratings by forging partnership with foreign investors. Bangladesh is now truly in the club of Asian Tiger nations along with Vietnam, Indonesia and others, after the ratings. But there is pressing need to do what is necessary to further improve conditions to maintain and improve on the ratings such as removing the bottlenecks to ensuring steady supply of energy to the industries, developing befitting infrastructure to augment growth, bringing in necessary reforms and improving governance by institution building.
Ratings of the two global top agencies will be reviewed annually. The Standard Chartered Bank and the Hong Kong and Shanghai Banking Corporation Limited, known as HSBC, were advisors to the Bangladesh government for S&P's rating, while Citibank advised for rating from Moody's.
Meanwhile, the Malaysian Rating Corp Bhd (MARC) recently entered into a technical collaboration agreement with Emerging Credit Rating Ltd (ECRL) of Bangladesh. Under the agreement, MARC will assume the role of technical partner to ECRL, providing consultancy in the development of ECRL's credit rating methodologies and training in credit analysis.
ECRL is expected to tap MARC's rating experience and benefit from the latter's track record of providing credit rating services in Malaysia over the last 12 years.
ECRL is currently on the final leg of obtaining approvals from Bangladesh Securities and Exchange Commission for the purpose of obtaining a domestic credit rating agency license. At present, there are two domestic credit rating agencies in Bangladesh.
"There is vast potential for credit rating services in Bangladesh, a key driver of which has been local banking regulatory requirements such as bank loan ratings, mandatory credit ratings for initial public offering purposes and financial institution ratings under Basel II requirement," said MARC in a statement.
MARC chief executive officer Mohd Razlan Mohamed said this development was a testimony to MARC's progression in becoming a matured rating agency capable of providing and exporting our technical knowledge and capability to new start-ups.
ECRL managing director NKA Mobin said the collaboration would enhance ECRL's capability to provide its credit rating services in Bangladesh upon its expected commencement of operations in 2010.