By Kirill Bezverkhy
Moody’s Ratings CEO Ray McDaniel has boldly advised those European governments which were unhappy with the agency’s ratings to start their own analysis service.
Europe has been unhappy with ratings agencies for quite a while as any downgrade of a country’s rating (be it Greece, Spain or Portugal) immediately affects the value of its treasury bonds making the state debt burden heavier.
Projects to create an independent ratings agency to oppose the US ratings giants are not new but no one has ever launched one yet. Thus, Moody’s proposal seems to be a challenge for Europe to create a new competitor for the agency. The head of the Analysis Department of Alemar Company Vassily Konuzin says:
“It is quite topical that such a state institution is set up to control the state debt which would shift a part of responsibility from ratings agencies and help to avoid wrangles on the market over a rating downgrade or an upgrade.”
Moody’s, Standard & Poor’s and Fitch Ratings benefit from a new state agency together with investors who don’t trust “the ratings Big Three” anymore.
“To be credible, the new firm would have to be independent of governments”, McDaniel said. He added that an initiative to limit the activity of ratings agencies will hardly change the current situation.
According to experts, all peacemaking attempts between Europe and the ratings agencies have failed and new conflicts are likely to happen soon.