The importance of rating we experienced in January of this year when Standard & amp; Poor’s unexpectedly downgraded Polish. As a result, gold rapidly lost, and Polish bond yields rose, which raised the cost of servicing the debt.
Credit rating agencies publishing their opinions, as if wyręczają investors in the study, how secure are the papers, they own money. On the one hand, the investor wants to know whether the issuer established their commitment, and to the latter depends on the show, it will not be a problem. The higher the rating, that rating, the safer the investment, but usually less profitable. Issuers who get worse ratings, are less reliable so as to attract investors must give them an additional risk premium – paying higher interest.
The first credit rating agencies established in the beginning of the last century
Chief Analyst Investment House Xelion Piotr Kuczynski explained that the first credit rating agencies established in the beginning of the last century – were to evaluate the ability to repay debt by other companies, banks and governments. Currently, the greatest significance are three: S & amp; P, Moody’s and Fitch. They employ masses of analysts, studying balance sheets and accounts of the institutions and countries, trying to give an adequate level of creditworthiness.
– For decades perpetuated that mainly their opinions are taken into account by investors who want to buy securities, but also by the institutions which in their statutes have saved the need to invest in assets with the highest ratings. ie for example. pension funds – said Kuczynski.
Until recently, the impact was huge ratings
He noted that until recently, the impact was huge ratings, the highest rating of AAA was treated as a sanctity; papers indicated that purchased a rating of “blind”. That, however, – he reminded – little has changed when it turned out that the bonds based on mortgages, which investors have proven to be “mine”, attracted the highest external rating.
Meanwhile, to individual players agencies do not assume virtually no liability (damages giant of approx. 1.38 billion. From the S & amp; P failed last year to get the US government). “How do you make a mistake, so be it. Do not assume the consequences of issuing too high or too low rating. The controversy also raises the fact that in many cases the ratings are paid for by the company or the state, which outsource their issue. This is a very dubious from the ethical and moral because usually the customer pays, this requires. that is why we are always question marks when it comes to the credibility of the ratings of such institutions, “- noted Kuczynski.
The ratings are investors
Also, prof. Leokadia Oręziak from SGH admitted that ratings are investors – without them we would have to analyze the situation, eg. A country, recognize possible dangers if their perspective. Some funds can not invest in securities that do not have adequate rating, which drives the market for credit rating agencies.
– The problem is that for their publications agencies do not take any responsibility, treat them as mere opinions, which can be used or not. The risk assumes the one who wants to use the rating. The recent crisis has shown that credit rating agencies, which are not independent institutions, and the private for-profit, not once come into conflict of interest; They estimate for the company, which advise. So who will pay more, you may have a better opinion. This is deeply unfair – believes Oręziak.
In her view, compensation which agencies have to pay for the errors of judgment constitute a small portion of their profits. – Besides proving rating agencies act in bad faith it is extremely difficult – reserved.
“We have to take into account the ratings of”
She pointed out that after the last crisis, tried to break away from the ratings of the three largest companies, but it did not work. – Nothing else invented, ratings are further and shows that it will continue. We must take them into account, this is the objective situation. Rating affects the cost of borrowing, which incurs Polish market – said economist.
She noted that now Poland is among a few of the 28 EU countries that pay the highest interest on the debt. – If our credit rating will be lowered, it certainly will not be better, rather worse. Credit rating agencies rule, it is a reality that can not be ignored. The only thing we can do is not to give the agency because of the issue of bad ratings – advises Oręziak.
“Guest rating agencies not be underestimated”
Also Kuczynski believes that despite the controversy surrounding the credit rating agencies of their assessments can not be underestimated. – Undoubtedly, we should worry about ratings on the creditworthiness of Polish; it goes in the world. Many investors who buy Polish bonds, do not bother making their own analytical department only looks at the rating. How goes up – to buy, as the rating falls – sell bonds and run away from the market – explained the analyst.
According to him, the rating is of particular importance if all three agencies give the same assessment or so. perspective. He pointed out that today Moody’s assesses Poland in the rating by two notches higher than S & amp; P and one step higher than Fitch. Any decision to downgrade Polish and his perspective would therefore be a step towards alignment with the assessments of other rating agencies. – Investors might believe that we are actually nothing special has happened, that would not have a big impact on the market. I would expect a rather short-term fluctuations – said Kuczynski.
According to him if he did not change Moody’s rating, and to simply change the outlook negative, then gold would significantly gained. – It would be regarded by the market as good news – says the analyst.
MF does not know the decision of Moody’s
MF reported that the ministry has not yet received a decision by Moody’s, and there is no information about whether the agency has already decided ws. The rating Polish. – In accordance with current regulations, credit rating agencies in the EU decision on the rating should be forwarded to the rated no later than 24 hours (working days) before it is made public. MF there is no possibility or authorizations to inform about reports of rating agencies before publishing their version of the final – written.
The ministry reported that, based on contracts signed ministry bears annual fees for credit ratings, which are made in different currencies . In 2015. They reached a total for all agencies (Fitch, Moody’s, Standard & amp; Poor’s JCR) 2 million 946 thousand. 22,12 zł.
On the other hand, Moody’s announced that it does not comment on potential rating changes.
Rafal Benecki, chief economist at ING Bank Slaski: Polish downgrading by Moody’s very likely.
Source: Newseria
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