Credit ratings, being the main tool for assessing the debt market, are used by investors around the world to assess the solvency of securities, enterprises, cities and even entire states. An increase or decrease in rating is a significant signal to investors about how much the risk of certain assets has changed. Based on the ratings, investment funds form their portfolios, banks determine interest rates on loans for large companies, insurance companies calculate their reserves.

The formation of credit ratings is carried out by special rating agencies. Today there are about 100 different rating agencies in the world, which can be divided into international and national. The most famous and influential international agencies are the “big three”: Standard & Poors, Moody's and Fitch Ratings. These agencies account for over 95% of all debt ratings in the world.

Assigning a rating to an issuer or security occurs on a commercial basis. The customer of the service can be a state, a company, or a financial organization. Having a rating gives issuers the opportunity to offer their securities to a wider range of investors, reduces interest rates, and also makes the borrower better known and affects its reputation.

Investors, thanks to ratings, can receive independent assessment reliability of certain securities, compare them with each other based on the risk/return ratio, and also promptly receive information about the deterioration or improvement of the issuers’ condition, which reflects a change in the rating.

In Russia, credit ratings are used for the following regulatory purposes: Central Bank Lombard List, investment of funds pension savings, calculation of insurance reserves of insurance companies, investment of funds military mortgage, placement of funds of state-owned companies, determination of guarantees for loans to enterprises agro-industrial complex, calculation of own funds of management companies, non-state pension funds, professional participants and insurance companies.

Until 2017, the international scale, which was formed by the Big Three, was used for regulatory purposes. However, after the “sanctions war” of 2014-2015, when all three agencies simultaneously downgraded Russia’s rating to speculative, it was decided to abandon this practice in order to reduce dependence on external risks. Since April 2017, the agencies S&P, Moody's and Fitch have been represented in Russia as branches, and their ratings can be used by foreign investors.

Since January 1, 2017, the activities of credit rating agencies (CRAs) in Russia have been regulated 222 federal law. According to this law, the national rating scale takes precedence over the international one, and only it is used for regulatory purposes. All organizations that work with government funds are required to obtain a rating on this scale from one of the agencies included in a special register of accredited KRAs compiled by the Central Bank.

Currently, only two agencies are included in the KRA register - ACRA and Expert Ra. They assign ratings to constituent entities of the Russian Federation, issuers of securities from the corporate and financial sectors of the economy, as well as bond issues within the framework of structured finance.

"ACRA"- Analytical credit rating agency. It was established on November 20, 2015 after the approval of 222-FZ with the goal of creating a rating agency whose methodology would be trusted by Russian financial institutions. There are 27 shareholders of ACRA Russian companies and financial institutions with equal shares of 3.7037% authorized capital, amounting to more than 3 billion rubles. generally. The list of shareholders can be found on the agency's official website.

"Expert RA"- a rating agency founded in 1997. In December 2016, it was included in the register of credit rating agencies of the Bank of Russia. Expert RA uses 16 methodologies for assigning credit ratings, 11 of which are recognized by the Bank of Russia as fully compliant with the requirements of Law 222-FZ and can be used for regulatory purposes. These are methodologies for assigning credit ratings to banks; regional and municipal authorities of the Russian Federation; Not financial companies; holding companies; project companies; leasing companies; microfinance organizations; financial companies; methodology for assigning credit ratings to debt instruments, as well as methodology for assigning financial reliability ratings to insurance companies and insurers specializing in life insurance. In addition to rating activities, the agency conducts various studies banking sector, leasing markets, factoring, insurance, microfinance organizations, non-state pension funds, etc.

*Commercial, economic and financial terms are implied

The Expert RA rating agency also sets forecasts for all current bank credit ratings.
Forecast means the Agency's opinion regarding possible change rating level in the medium term.

Types of forecasts:

- Positive outlook: there is a high probability of a rating upgrade in the medium term
- Negative outlook: there is a high probability of a rating downgrade in the medium term
- Stable outlook: there is a high probability of maintaining the rating at the same level in the medium term
- Evolving Forecast: in the medium term, 2 or more options for rating actions are equally likely (maintaining, increasing or decreasing the rating)

In addition to the two agencies and branches of the Big Three accredited by the Central Bank, three more large rating agencies operate in Russia. These are the National Rating Agency (NRA), Rus-Rating and AK&M.

“National Rating Agency” has existed since 2002. On January 13, 2017, the activity of assigning credit ratings was stopped. Currently, it continues to assign and update non-credit ratings, such as ratings of reliability, quality of services, quality corporate governance, quality of risk management, attractiveness of employers and others.

The AK&M rating agency has existed since 2005. Its history dates back to the rating center of the information and analytical agency AK&M, which has been generating ratings since 1994. Since January 13, 2017, it has continued rating activities not related to the assignment of credit ratings.

BKS Express

What is a credit rating?

Agency analysts, based on many sources of information, compile credit ratings , providing the issuer of debt obligations with a unique assessment of solvency. Those. credit rating is this assessment, “compressed” into a short literal expression with a certain financial sense. The higher the credit rating, the more reliable the investment object, but also the lower its potential return on debt instruments (bills, ).

World rating agencies

In the global market today there are three generally recognized rating agencies, which cover about 95% of the market:

Standard & Poor's

Moody's Agency

Fitch Agency

• international, by which debt issuers are compared with other countries or foreign companies;

• national, which compares issuers within one country

Depending on the term of the creditworthiness forecast, long-term ratings (long term, for a period of more than a year) and short-term ratings (less than a year) are distinguished. The latter is associated with the long-term and changes (increases or decreases) synchronously with it.

And finally, there are types of ratings in foreign (foreign) and local national (local) currencies. They may differ for one issuer if there are different conditions for fulfilling obligations in the national currency relative to foreign ones.

S&P agency credit rating

The rating value ranges from the best "AAA" to the worst "D". “+” or “-” (plus/minus) signs can be added to the letter designation from “AA” to “CCC”. They reflect a slightly better or slightly worse position of the issuer within one rating position. For example, an issuer with an AA+ rating is slightly more reliable for an investor than an issuer with an AA rating. Accordingly, the issuer “AA-” is less reliable for investments than “AA”.

• positive (Positive) the rating value can be increased;

• negative (Negative) - reduced;

• stable – the value most likely will not change;

• Developing – the value can be either increased or decreased.

Forecasting horizon - from 6 months to 2 years.

S&P rating scale

• investment category (stable, successful issuers or securities);

• speculative (riskier group of issuers); the ratings of this group are sometimes called "junk".

Alphabetic and alphanumeric (A-1, A-2, A-3, etc.) designations in brackets refer to the short-term rating scale. Instead of the last two lines, other designations may be indicated:

• R - due to an unfavorable financial condition, the issuer is under the supervision of regulators, who may decide in favor of fulfilling one obligation over others;

• SD - the issuer cannot repay one obligation or category of obligations, but repays others;

• D – the issuer is unable to fulfill all or virtually all obligations.

How to find out the rating calculated by S&P?

On the website of this agency:

http://www.standardandpoors.com/home/en/us ― English version;

http://www.standardandpoors.com/home/ru/ru ― Russian version

On the main page on the left there is a search bar, under which you need to select a search option:

• name of the country or organization (“entity”);

• security ticker (“ticker”);

• security code (CUSIP, CINS, ISIN).

After this, you need to enter the required name in the search bar and select the one you are looking for from the proposed pop-up options. If the inscription “NR” appears on the issuer, this means that the rating was not assigned. However, the first time you contact, the system will require registration:

After passing easy procedure and receiving a confirmation letter to the specified email address, you can enter the name of the organization you are interested in in the search window (field “Find a Rating...”). If we perform a search for the broker Interactive Brokers, we will see the following results for today:

Local Currenty LT and ST denote the broker's long-term and short-term ratings in local currency, while Local Currenty LT and ST denote the same ratings in foreign currency. The table shows that the broker is highly reliable with a slightly higher short-term rating, as well as a stable long-term forecast (penultimate column of CreditWatch/Outlook), made at the end of 2014. And here are the data for today for the Russian Federation:

Quite expectedly, the country’s rating in the national currency (rubles) turns out to be noticeably higher than in foreign currency (primarily in dollars). In addition, it is clear that, in the opinion of the agency, the creditworthiness of the broker discussed earlier is higher than that of Russia as a whole - if we choose the dollar as the common denominator. We periodically raise the question of the political bias of such ratings - personally, I consider them to be quite objective and based both on historical data (remember the default of 1998 or the recent December 2014) and on the real state of affairs (Russia’s dependence on oil, see).

Moody's credit rating

The numbers 1,2,3 can be added to categories from “Aa” to “Caa”. A unit “says” that the issuer occupies the top line in its rating category (for example, “Aa”). Two is in the middle. Three is at the bottom of the rating category. Such a rating is designated as follows: for example, “Aa1”, “B2”, “Caa3”.

In addition to calculating the value, the agency also gives a long-term and short-term rating forecast - as does S&P.

The short-term rating, except for the undefined NP (refusal to assess short-term creditworthiness), can vary from P-1 (Prime-1, excellent ability to repay short-term debts) to P-3 (Prime-3, acceptable ability to repay short-term debts). In relation to the Moody's rating table above for long-term obligations, all Prime values ​​given fall into the investment category, i.e. with an issuer rating of at least Baa.

How can I find out the rating calculated by Moody's?

https://www.moodys.com/ - English version;

https://www.moodys.com/pages/default_ee.aspx - version in Russian

The search field is located on the main page of the site in the upper left part. In this field you must enter the name of the country or company you are looking for, or the ticker symbol of the security. After this, a drop-down list of the most suitable options will be displayed. By clicking on the desired one, we are automatically moved to the page with the ratings of the required issuer. The very first in the generated list is the long-term rating in foreign currency.

If an agency user visits the site for the first time, to search for a rating, as in the case of S&P, you will need to register once, including checking the “I agree with the terms of use of the site” checkbox. I was able to do this only by scrolling through the agreement to the end. After filling out a few lines and confirming your registration by email(by clicking on the link) you will be automatically redirected to the Moody’s website under your login. If this does not happen, then the login should be the specified email. Let's look for the rating of the Russian Federation:

It can be seen from this that Russia’s long-term rating for obligations in foreign currency is designated as Ba1, i.e. stands right on the border between investment and speculative categories. The short-term rating has not been determined, the specified forecast is negative, which is quite at odds with the stable forecast from S&P (although both were made in 2016 with a difference of about six months). In summary, despite the many evaluation parameters, the ratings are relatively subjective. However, Moody’s has a convenient indicator for viewing the rating history of the issuer, for which you need to switch to the “Rating” tab:

Here you can see how, having dropped to the level of default in 1998, Russia’s long-term rating in national currency began to grow from 2000 to 2009, which was caused by an increase in oil prices. Its stabilization at high levels by 2010 also stopped Russia’s rating, and the fall in the price of a barrel together with the devaluation of the ruble in December 2014 led to a slight downgrade in the rating. “Domestic” denotes the domestic rating in national currency, “Foreign” - in foreign currency. “Senior Unsecured” can be translated as senior unsecured debt obligations: in domestic or foreign currency, respectively. In total, you can select and view 5 types of ratings at once - but they are close to 100%, so I will limit myself to what is shown in the picture. By clicking on " Issuer Outlook" you can also see the history of the company's forecasts for the future issuer rating. In the case of foreign issuers, the English version may sometimes be more productive.

Credit rating from Fitch Ratings

The rating scale of this agency is similar to the S&P scale and has an alphabetic designation. A "+" or "-" sign is added to ratings from "AA" to "B". Information about a specific issuer's rating can be found on the following sites (after registration):

https://www.fitchratings.com/site/home - English version

http://www.fitchratings.ru/ru/ — Russian version

Let's choose the Russian version. As in previous cases, you must go through the formal registration procedure by clicking on “Create Account”. There are several more fields to fill out here than in previous systems, but they are not difficult to understand - the data is not checked, so you can write any phone numbers and home address (unlike the email to which confirmation will be sent). Having filled out everything and put two checkmarks below, we receive a confirmation letter in our mailbox and click on the link in it. After which you can return to home page and enter your username and password in the upper right corner. After logging into the system, let’s try to find Russia’s rating there by entering “russia” - unlike S&P and Moody’s, there are no pop-up tips here yet. We get the following results:

In fact, the Fitch agency is the only one of all three that allows you to conduct searches in Russian - i.e. in the search bar you can also type “ Russian Federation" Although, to search for ratings of foreign issuers, it is better to use the English version of the site (the “Issuers” item there will correspond to “ ENTITIES" - but in general, according to my observations, of all three systems, this is the most capricious in displaying information). Click on the lowest issuer:

As can be seen from the table, the rating description is in Russian. The first two lines indicate obligations in foreign currency; the first line can be considered the most important for assessing the issuer. By clicking on “Rating history” at the bottom right, you can see the history of rating assigned to the issuer (similar to Moody’s, only there the history is presented in the form of a graph). The issuer's forecast is indicated as a colored icon to the right of the rating value:

Those. Fitch has a stable forecast for Russia today. The letter designations can be deciphered as follows:

In parentheses, as before, the short-term rating is indicated.

Comparison of world agency ratings

The three most popular global agencies that assign their ratings were discussed above. The importance of this action can hardly be overestimated - millions of investors and multi-billion-dollar capital are guided by them. And although in estimates, and especially in forecasts, data from agencies may differ from each other, regarding large issuers the discrepancies are almost never significant. At the end of the article, I draw a table of correspondence between the ratings of all three agencies relative to each other:

Over the past few years, headlines with the words “rating agencies” and “credit ratings” have appeared in news feeds and regular publications. These publications talk about increases or decreases in credit ratings of both entire countries and individual companies. The latest uproar over the actions of rating agencies occurred at the height of the 2008 crisis.

On our own rating agencies are commercial organizations who study the quality of asset management, assess the solvency of issuers, and analyze possible risks for potential investors and many others. On at the moment There are more than 100 rating agencies in the world, the most famous of which are Moody’s, Fitch Ratings and Standard & Poor’s. In essence, all of these agencies are publishing and information organizations that formulate and create credit ratings. It is generally accepted that they are completely independent, since they do not take part in transactions on the markets.

Credit rating from rating agencies

The most well-known activity of rating agencies is assessing solvency or issuing a credit rating, which reflects the risks of non-payment of debt obligations and has a direct impact on the profitability and cost of debt obligations, as well as on the size interest rate. The lower the risk of non-payment, the higher the issuer's credit rating. Credit ratings issued can be short-term or long-term. Short-term ratings predict the solvency of the issuer being assessed within a year, and long-term ratings for more than long period. When compiling a long-term rating, agencies provide forecasts that can be stable, negative, positive or developing. These forecasts indicate a possible change in the credit rating in the next six months or year.

Long-term ratings (using the example of Standard & Poor’s)

A long-term rating can range from D, which means , to AAA, which indicates the issuer’s exceptionally high ability to repay loans. Between the lowest and highest value The rating has the following categories: C - serious difficulties, the start of the issuer's bankruptcy procedure is more than likely CC - great difficulties with any payments CCC - serious difficulties with payments on debt obligations B - solvency is at a satisfactory level, but an unfavorable economic situation may negatively affect payments BB - similar to rating B, but the likelihood of the impact of unfavorable economic conditions is slightly lower BBB - satisfactory solvency A - high ability to repay loan obligations, but dependent on the economic situation AA - high ability of the issuer to repay loan obligations Interim ratings are depicted as a plus sign or “minus” after the letter designation of the credit rating. In addition to the listed ratings, there are such values ​​as: SD - refusal to pay on some credit obligations NR - no credit rating.

Short-term ratings

Short-term ratings are designated much more simply than long-term ones and include the following categories: D - the obligation is in default C - limited chances of repaying debts that are completely dependent on the economic situation B - speculative debt with chances of repayment highly dependent on the market situation A- 1, A-2, A-3 - similar to the first three indicators of long-term ratings

What are rating agency ratings used for?

Ratings are used to limit investments, as well as to admit investments to the lists of acceptable ones. For example, Central banks require ratings to be included in pawnshop lists - the lower the rating, the higher; similar requirements apply for investment. It is important to understand that ratings only assess the issuer's ability to pay debts. Therefore, countries or organizations that spend all their available funds on debt service will be rated significantly higher than refinancing and fast-growing issuers. Ratings become especially popular during crises, when investors begin to look for safe opportunities to invest their funds.

How are credit ratings compiled by rating agencies?

When determining the creditworthiness of the issuer, a comprehensive check is carried out of its readiness and ability to fulfill its financial obligations in strict accordance with the conditions for their fulfillment. This takes into account the competitiveness of the company, the features of its corporate governance and management, economic and geopolitical factors, performance indicators, operating characteristics, specific risk factors and other financial and economic characteristics that may somehow affect the fulfillment of debt obligations. When determining the credit rating of a sovereign issuer, which is the national government, the main focus is on political risks, general level debt burden and stability of the national currency exchange rate. When assessing the credit qualities of specific debt obligations, which can be municipal or comparative, and the probability of default on them, the one provided by the issuer itself is most often used. When rating municipal and corporate bonds, rating agencies first evaluate the issuer itself, and only after that the credit quality of the bond as a debt obligation. This assessment mechanism acts as a kind of airbag that limits the credit risks that may be associated with this obligation. Rating agencies may assess the level of likely recovery of debts after default, or the possibility that if a borrower defaults, investors will be able to recover the outstanding portion of the principal amount of the debt. The probability of repayment can act as a separate rating or be used as a factor in assigning a credit rating.

Who funds rating agencies?

The main source of funding for rating agencies is the issuers themselves, who pay for the very fact of their inclusion in the ratings. They pay an annual fee to receive an assessment of their own ability to repay debt obligations, as well as receive advice on improving their current credit ratings. It turns out that issuers and investors are interested in the activities of rating agencies. The first group strives for a higher position in the ratings in order to obtain more favorable financing conditions. The second group is interested in the honesty of agencies when issuing credit ratings. Since issuers pay, it is possible that informal contracts may exist between them and the rating agencies. This is actively criticized, but at present there is no real alternative. Therefore, rating agencies continue to play a significant role in the global economy due to the fact that it is almost impossible to prove their mistakes, and at the moment there is no one to replace them.

Countries and credit ratings

Over the past five years, quite a few dissatisfied governments have emerged who have experienced the consequences of downgrading credit ratings, leading to a significant increase in government costs for servicing external debts. Despite such criticism, investors continue to listen to rating agencies because they need information about a country's financial affairs. The reaction to such dissatisfaction was manifested in Europe with the adoption, last month, of a package of documents limiting the activities of rating agencies regarding sovereign ratings. From now on, they can be announced only three times a year, which will somewhat reduce investor interest in them due to the lack of timely data.

Are the forecasts of rating agencies adequate?

Amid accusations of subjectivity, the adequacy of rating agencies' forecasts is easy to verify. It is necessary to compare the number of defaults that actually occurred on securities. The main factor in investor confidence in the “rating” is that credit ratings have confirmed their predictive power. The statistics were very convincing even during crises: in the bond market, the number of defaults was directly dependent on the level of the rating. The higher the rating, the fewer defaults on bonds there were. There is a fairly common misconception that with a high rating, default is impossible, and if it happens, then it is a mistake. Default can happen with any rating, even the highest. The main question is the number of such defaults. Anyone should understand that when purchasing a bond portfolio, with a very high ratings, the entire portfolio will not be exposed serious risks, even if some paper defaults. After all, a credit rating is not a panacea for default.

An alternative to the Big Three rating agencies

European politicians are not happy with the fact that the whole world is dependent on three, and in fact even two companies (Moody’s and Standard & Poor’s), which occupy about 80% of the world market in the field of rating services. In the current situation, many are trying to discover elements of a geopolitical conspiracy, since the roots of the “rating three” are from the United States. The first thing that comes to mind is to increase the number of rating agencies. Perhaps their assessments will differ from the troika’s forecasts and investors will form their opinion about companies by comparing ratings. Europe is beginning to move along this path, trying to increase the role of national rating agencies. Unfortunately, these agencies will be respected within certain countries, and will mean nothing when assigning ratings on a global scale. The idea of ​​creating a Single European Rating Agency was abandoned due to a conflict of interest. A worthy competitor to the “rating three” will appear in the form of the international rating agency Universal Credit Rating Group (UCRG), which is created by companies from Russia, the USA and China; the UCRA agency was offered to join this project. The idea of ​​creating UCRG is based on the association of companies with local expertise, a good understanding of the internal industry, and the ability to qualitatively and impartially assign ratings according to the national scale. These companies should not work for a global investor. The main task of UCRG is to be able to unite local players in order to assign ratings on an international scale. The project has good prospects, which confirms the existence of similar initiatives. UCRG will be able to displace the “top three” rating only in 7-10 years, since it is impossible to instantly create trust.

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Today we present the rating... of the world's largest rating agencies. And what? They assign ratings, right? So our experts decided to make a ranking of representatives of this business segment. As a result of analysis and evaluation, we were able to select 15 companies with the largest customer base. The predominant agencies are from the USA - as many as six companies (including one “joint venture” between the USA and the UK); two organizations from Japan, and one more representative each from Canada, China, India, Kuwait, Russia and Ukraine. The S&P agency took first place in the ranking, having managed to attract 2,682 clients from all over the world. And the largest agency in the Russian Federation, Expert RA, took penultimate, 14th place, with an indicator of 350 clients. True, the ratings of this company, as a rule, are quoted only in the Russian Federation, and even in Kazakhstan (where Expert’s subsidiary is located), therefore the “weight” of the client base, if such an indicator can be applied to the quality of the customer portfolio, is not comparable with the leaders. From now on, we will annually rank rating agencies, but we will expand the number of criteria: we will analyze not only the number of clients, but also their quality, and total assets customer base.