Kazakhstan to Create National Rating Agency

A national rating agency will be created in Kazakhstan, Orda.kz reports.

International and foreign rating agencies will also operate under new rules. A bill to this effect was approved by the mazhilis in the first reading. The shareholders of the Kazakhstan rating agency will include the National Bank, an international rating agency and financial organizations.

The document sets out the principles of regulation: quality, integrity, transparency and the prevention of conflicts of interest. It also introduces requirements for the agency’s capital, estimated at about 10 billion tenge, as well as for methodologies and the independence of analysts.

Madina Abylkassymova, chair of the Agency for Regulation and Development of the Financial Market, explained how rating agencies will operate in Kazakhstan.

Kazakhstan will introduce clear criteria for recognising rating agencies. Their work experience, methodology and previous assessments will be taken into account.

She explained the difference between the types of agencies. International agencies include, first of all, representatives of the “big three” — Standard & Poor’s, Fitch and Moody’s — as well as major agencies recognized in at least five OECD countries. Foreign agencies are a broader group of companies whose ratings can be recognized under the principle of mutual recognition, including within the EAEU.

Foreign rating agencies are a mechanism of mutual recognition of ratings that is now actively used. We apply it within the framework of the Eurasian Economic Union, when we recognize the ratings of other foreign rating agencies on the basis of specific criteria.she said at a briefing in the mazhilis. 

The companies ordering the ratings will pay for them. This applies not only to credit ratings, but also to ESG ratings and corporate governance ratings.

The cost will be based on standard expenses, including analysts’ work, infrastructure and access to databases. At the same time, the creation of a national rating agency is expected to significantly reduce the price of such services.

According to Abylkassymova, the cost of services provided by international agencies can exceed $50,000, whereas in Kazakhstan the cost is around 5 million tenge per rating. The final amount depends on the type of rating: credit ratings are usually more expensive than others.

Original author: Ilya Astakhov

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