A.Arzoyan: National rating scale needed to activate Armenia`s Bond Market
ArmInfo.To activate the bond market of Armenia, a national scale of ratings is needed. Arshinbank Risk Management Director Artak Arzoyan expressed this opinion in an interview with ArmInfo, explaining that local investors and borrowers dominate the national financial market, and an internal credit rating is required for the issuance of debt securities of certain categories.
He noted that Ardshinbank is the only Armenian bank with the credit ratings of two international agencies Fitch Ratings and Moody's Investors Service, preferred to withdraw its bonds to the foreign market. But in the future, when the national scale of ratings will work, for which Ardshinbank, which holds the leading positions in the financial market, has all chances to get a high investment rating, there will be a bond issue in the local market. Meanwhile, the eyes of Ardshinbank with each tranche are directed to the foreign capital market.
He explained that the national scale provides more opportunities for differentiating the creditworthiness of issuers, since it excludes some sovereign risks, in particular the risk of transfer of funds outside the state and other systematic risks, which are equally characteristic for all issuers in this market. "Domestic credit ratings on the national scale are important because the country risk does not allow making clear distinctions between groups of credit risk of various national borrowers or their debt obligations.In this situation, the national credit rating is an alternative assessment of the issuer's creditworthiness with the lowest credit risk in the country," stressed Arzoyan.
"The advantages of rating estimates on the securities market are that this is a source of information and an objective assessment for the investor about reliability of the issuer, or security, and providing access to capital. In addition, the rating encourages the diversification of sources financing, since it allows the issuer to apply to borrowings not only in the securities market, but also in other financial markets. Along with this, the rating is an instrument for reducing the cost of borrowed capital, since it allows the issuer to minimize the costs of placement and servicing of bonded loans, contributes to the improvement of the conditions for granting loans. And at the same time, the rating is used as a regulatory tool, "A. Arzoyan summarized.
To note, on July 4, during a heated debate in Yerevan, organized by Fitch and the Central Bank, the issue of the need to establish a national scale of credit ratings was also touched upon. But judging from the situation in Russia, where Fitch Ratings (in December 2016) and Moody's (in March 20016) decided to revoke the ratings assigned to Russian issuers on the national scale, it is likely that the national scale of credit ratings is unlikely to appear in Armenia, unless, of course, the Central Bank Will not take a constructive approach to resolving this issue.
To recall, in Armenia, only four banks have ratings of Fitch or Moody's: Ameriabank, Ardshinbank, ACBA-Credit Agricole Bank and Anelik Bank. Moreover, only from Fitch - Ameriabank and ACBA- Credit Agricole Bank, only from Moody's - Anelik Bank, and Ardshinbank has ratings and Moody's and Fitch. Of these, only ACBA-Credit Agricole Bank is not an issuer of bonds, while Ameriabank is on the stock market with the 4th issue, Anelik Bank is from the 3rd, and Ardshinbank is placing its securities on the foreign market. In total, there are 32 issuer bonds on the stock market of Armenia, of which 7 are banks - Araratbank, Ameriabank, Unibank, Armbusinessbank, Armswissbank, Anelik Bank and Converse Bank. Along with them, prometey Bank issues bonds, but in his case, as well as with Ardshinbank, preference is given to the foreign market.