July 4, 2017 / 2:49 PM / 2 years ago

Russian ratings agency ACRA sees portfolio growing as foreigners leave

MOSCOW (Reuters) - Russia’s newly created ratings agency ACRA plans to have over 100 ratings in its portfolio by year-end, its head says, picking up local business after the world’s major agencies refused to sign up to new accreditation requirements.

FILE PHOTO: Ekaterina Trofimova, CEO of Analytical Credit Rating Agency (ACRA), attends a session of the annual VTB Capital "Russia Calling!" Investment Forum in Moscow, Russia October 13, 2016. REUTERS/Sergei Karpukhin/File Photo

The Big Three — Standard and Poor’s, Moody’s and Fitch — will withdraw from the domestic, national scale ratings market from July 14, having shunned the special accreditation law administered by the Russian central bank.

The accreditation requirement was introduced after Russia’s sovereign rating was downgraded as a result of Western sanctions. Russia says it is designed to prevent rating agencies from withdrawing local ratings under external political pressure; the agencies see it as a restriction on their work.

ACRA, the Analytical Credit Ratings Agency, is a major beneficiary of the withdrawal.

Ekaterina Trofimova, ACRA’s head, told Reuters in an interview her agency already has 40 public ratings in its portfolio and some non-public ratings.

“According to our business plan, we should have a (total outstanding) 100 contracts signed (public and non-public) by year-end. We will exceed this level for sure,” Trofimova, a former S&P analyst who was also an executive with Gazprombank, said.

The ratings in question — called national scale ratings — are essential for using domestic debt instruments, including central bank refinancing. Global rating agencies will continue to provide sovereign ratings and ratings for external debt instruments such as Eurobonds.

Fitch, for example, had around 150 public Russian national scale ratings when it said at the end of the last year it would withdraw them following the new legislation.

ACRA is the only ratings agency to have obtained the central bank’s accreditation by the required deadline.

“I am confident that the Big Three will sooner or later join this (new regulatory) regime,” Trofimova said. “I think that the reasonable nature of (the accreditation) will become clear as the market and the profitability of such operations grow,” Trofimova said.

Ratings are essential to raise debt on the domestic rouble bond market, where companies and banks have raised a total of around 800 billion roubles (£10.4 billion) so far this year, according to Reuters data, and as Eurobonds remain a privilege of top-notch Russian companies.

Trofimova said that interest in ACRA, established in late 2015, is growing outside Russia where she spends up to a third of her time now.

“We are in talks with around a dozen countries on different types of possible cooperation,” Trofimova said with a smile. She did not elaborate further.

Additional reporting by Elena Orekhova; Writing by Katya Golubkova; Editing by Jeremy Gaint

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