Procedure for Credibility Ratings Assigned to Constituent Entities and Municipalities

The procedure for credibility ratings features the following two critical phases:

• Filing an application for a credibility rating

A credibility rating application shall be originated by the regional or municipality administration and dispatched to any Consortium member.

• Holding a meeting of rating agency experts and regional/municipality administration agents

That meeting shall produce an agreement on provision of rating (information) services. Under the agreement, Expert RA and AK&M shall be committed to assign a credibility rating to the given region and provide relevant data support for the rating in question. The region (municipality) shall be committed to release the requisite data on its pursuits in keeping with agency enquiries:

- A list of baseline indicators, characteristics and other performance parameters needed to develop a regional (municipality) credibility rating, the data being carried by a template-based backgrounder attached to the agreement.

- A questionnaire shall be filled out by agency experts as they interview regional/municipality administration officials.

• Research of customer-origin data in order to draft a rating statement in compliance with the applicable methodology for regional credibility ratings

Collection, validation, drafting and processing of the primary data shall be carried out by a dedicated research team set up after a credibility rating application has been received and filed. The said research team shall produce a draft rating statement that should then be examined by a panel of experts.

• Session by a panel of experts

Following receipt of the draft rating statement dispatched by the research team, the panel of experts shall pass an expert opinion on the credibility rating statement’s quality, its being compliant with the relevant methodology and its chances for being appropriately confirmed by the rating committee. Should it be necessary, the panel of experts shall have the credibility rating statement returned to the research group for requisite refinements.

• Tweaking and finalizing the credibility rating statement with due regard for the guidance related to assigning the desired credibility rating

• Session by the rating committee to assign a credibility rating

The rating committee shall confirm the finalized credibility rating statement that should then be submitted to the customer and released, subject to the customer’s concurrence, to the mass media. While proceeding from perusal of the credibility rating statement and expert opinion, the rating committee session shall pass a decision on assigning the relevant credibility rating status for that or other constituent unit/municipality of the Russian Federation.

• Notifying the customer of the rating assigned

Should the research team-drafted regional rating fail to meet the customer expectations or should the customer be willing to provide some fresh data that might materially bear on the desired credibility rating, the panel of experts shall have the right to review its findings either upwards or downwards.

• Data support for the rating status and monitoring the region’s performance for one year out
• Reviewing or recalling the rating status

An effort to review the assigned rating shall be undertaken by rating agencies:
- in keeping with the scheduled timelines agreed by the customer;
- to service an unscheduled customer request;
- when the research team has received some news of the issuer having radically lost its ability to satisfy it debt obligations.

Rating agencies shall reserve the right to recall/void the assigned credibility rating in the event of:
- the customer unwilling to release the data stipulated by the relevant agreement’s provisions;
- the credibility rating methodology having to be amended or updated following a radical shift in the country’s socio-economic or political environment;
- a sharp deterioration in the prime performance indicators underpinning the issuer’s credibility rating.