Expert RA-AK&M Rating Consortium

December 3, 2002, Expert RA and АК&М issued an announcement on establishing a consortium that would deal in the business of assigning credibility ratings to Russian constituent units (regions) and municipal formations (municipalities) across the Russian Federation through the use of pertinent rating methodology. First national-scale-geared rating judgments had been passed in early 2003.

Notably, it was the first time in Russia when two standalone think tanks came to strike a strategic partnership agreement and set up the Expert RA-АК&М rating consortium.

The Consortium’s mission is to assign credibility ratings for Russian constituent units (regions) and municipal formations (municipalities) by way of:

• Applying a single rating methodology;
• Using a single set of regulatory documents and procedures;
• Creating a joint research team to support credibility-rating-related tasks.

Expert RA-AK&M developed the methodology for assigning credibility ratings for Russian regions and municipalities in early October 2002. To point out, the document makes the first Russian methodology that happens to be reflective of regional development specifics and is not pegged to the country’s sovereign credibility rating.

Mid-November 2002 saw the Expert RA-AK&M national credibility rating scale being completed and made ready for application. It features four classes (ten subclasses) and carries detailed provisions designed to check and see whether objective (unbiased) and subjective parameters underpinning regional/municipality credibility ratings are compliant with the requirements for full and timely payouts on the outstanding or would-be debts.

An effort to assign first Expert RA-AK&M credibility ratings will be kick-started shortly. Starting from 2003, we plan to assign 3-5 pilot credibility ratings. Right now we are in talks with eight Russian regions and municipalities interested in securing such ratings.

To underscore, the Expert RA-AK&M consortium is well equipped to succeed in the market for provision of credibility rating services. Both rating agencies command a large body of experience related to development of comparative ratings for Russian regions (Expert RA used to assign investment credibility ratings for Russian regions starting from 1996, while AK&M provided relative credibility ratings for Russian constituent units) and huge finance-based DBMS capacities. Importantly, Expert RA-AK&M ratings have been eagerly used by all experts dealing in the business of Russian finance. Clearly, the joint effort of the two companies would allow investors to have a dependable facility to look at credibility ratings of Russian regions. The Project has already received a good deal of support from the investing community.

Additional information:

The Expert RA rating agency - Nadezhda Largina (tel. 251-16-66)

АК&М information agency - Larisa Taymurazova (tel. 916-71-51)