Special Coverage

Universal Credit Rating Group's team visits ISE

Sep 19, 2014 02:33 PM Author Business Recorder Font:TTT

A high-level delegation from Universal Credit Rating Group (UCRG) has visited the Islamabad Stock Exchange Limited (ISE). The delegation included representatives of founder partners - Guan Jianzhong, Chairman and President, Dagong Global Credit Rating and Richard Hainsworth, Director, RusRating.

According to an announcement of the ISE here on Tuesday, Guan said the three independent credit rating agencies from China, US and Russia had launched the Universal Credit Rating Group in June this year in Hong Kong. The UCRG, comprised Dagong Global Credit Rating, Egan-Jones Ratings Co and RusRating, with the aim at setting up a non-sovereign global credit rating agency that will reform the current rating system dominated by the three American-based firms, Moody's, Fitch, and Standard and Poor's.

He stated that the idea of UCRG was first proposed by Dagong in 2008 when there was abrupt global financial crisis. Many experts say the dominant ratings agencies are largely to blame for intensifying the credit crisis by providing inaccurate and excessively high ratings for problematic securities. Dagong said such a high paid, dominant model needed to be replaced with a dual-rating system that could balance rating risks. He further said the UCRG was a non-sovereign agency with wide representation hence every country could become its investor, or shareholder. It does not represent any national or corporate interests.

Guan said they had met Finance Minister and discussed various points of mutual interest including seeking sovereign rating of Pakistan by UCRG as an alternate to the existing ratings by the dominant international rating agencies, introducing Pakistan as a new Yuan-based market, providing access to Chinese investors to Pakistan market and developing a Yuan-based bond in regional markets outside China. He said he received a positive response from the Government.

Richard said UCRG was a new venture with Russian and US partners to challenge the dominance of the major rating agencies that were blamed for contributing to the global financial crisis. "UCRG aims at providing some balance to the industry, traditionally cornered by Moody's, Standard & Poor's and Fitch. Credit ratings are indispensable in global economic operation, and it is obvious that the current rating system needs reformation and introduction of new thinking," he added.

Faheem Ahmad, President and CEO of JCR-VIS Credit Rating Company Limited, said that Yuan-based bond market could help Pakistan lessen its dependence on dollar. He lauded the efforts of UCRG for creating healthy competition amongst the raters. Ahmad Noman, COO, ISE, gave a detailed presentation on ISE and criteria for strategic investors to acquire 40 percent shares of ISE under Demutualization Act.

Zahid Latif Khan appreciated the efforts of the UCRG and said Pakistan could be the best place for it to work further for mutual interests. He said Chinese companies could consider strategic investment in ISE. Muhammad Rashid Zahir, Chairman ISE, said he was pleased to note the establishment of UCRG. He expected a good fair competition amongst the leading rating agencies, and assured full cooperation from ISE to boost further relations between the two entities for mutual interest.

The briefing was also attended by Farrukh Younas Khan, Asif Saeed Malik and Muhammad Masud Chaudhry, Directors ISE. It is important to note that there are more than 70 credit rating agencies worldwide and the big three US-based ratings companies alone hold a collective market share of roughly 95 percent. The UCRG may also prove to be a good alternate for many countries for their sovereign rating.