 | Moody's, S&P respond to credit rating proposal for Bangladesh
20 July, 2008
Two international credit rating agencies -- Standard & Poor's and Moody's Investors Service -- have responded to the central bank's proposal to conduct credit rating for Bangladesh, a move that will help the country attract more foreign investment and receive international aid easily, sources said.
The central bank in May this year initiated the move for Bangladesh's first-ever credit rating following arbitrary credit ratings for the country by donors and individual enterprises and countries.
For carrying out the job, the Bangladesh Bank (BB) invited three rating agencies of which Japan Credit Rating Agency did not respond, BB sources said.
“A technical evaluation committee will sit this week to assess proposals of Standard & Poor's and Moody's Investors Service,” a top BB official told The Daily Star.
The five-member committee has been formed comprising officials from BB, the commerce ministry and Institute of Chartered Accountants of Bangladesh.
The BB official said: “The central bank is ready to issue work orders to these intended firms by the next month.”
Citibank NA, Hongkong and Shanghai Banking Corporation (HSBC) and Standard Chartered Bank will offer advisory services to the BB in the total process of completing the task, sources said.
The central bank has already got the go-ahead from the government on the issue, they added.
The two agencies will conduct Bangladesh's credit rating independently, and the BB will assess the reports of these two firms separately for a better rating of the country, a BB executive director (ED) said.
"We need such a credit rating for the country so that any organisations or countries cannot do rating solely on Bangladesh based on their own perceptions," the BB ED said.
"I have seen some kinds of ratings that unnecessarily branded Bangladesh as a high risk country," BB Governor Dr Salehuddin Ahmed told a discussion organised by Metropolitan Chamber of Commerce and Industries a couple of months ago. He cited examples of Standard Chartered Bank and an OECD country that rated Bangladesh as a 'high risk' country.
BB officials believe country rating will help Bangladesh mobilise resources from the capital market.
They said foreign investors and multilateral lenders evaluate credit rating of a country before making investment or providing loans.
Although credit rating for business organisations is common globally, country credit rating is a little new. However, besides developed countries, some Middle East and many African countries have their country credit ratings.
Credit rating generally reflects a country's overall economic situation, but socio-political issues also get high focus.
United Nations Development Programme (UNDP) has helped sub-Saharan African and a few developing countries get their credit ratings.
The BB ED said the central bank has decided not to take help from donors in obtaining the credit rating, as the cost to employ international firms for rating is not much high.
Release link:http://www.thedailystar.net/story.php?nid=46589
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