Local agency hits at big rating firms
Servet Yeşilyurt - ISTANBUL
A closeup shows a media website with triple ‘A’ letters. The criticism against top rating agencies is justified, says Seçkin.Most criticism against international rating agencies are justified, especially regarding sovereign ratings, said the head of SAHA Corporate Governance and Credit Rating Services, Inc.
At a time when international rating agencies face fierce criticism from both Turkey and the debt-ridden eurozone countries, SAHA, the first local Turkish rating firm, aims high both in Turkey and the adjoining region.
“As sovereign ratings are based on experts’ subjective and Orientalist views and Orientalism has become part of the soul of almost all Western institutions, the experts’ views are likewise,” said Selim Suhan Seçkin, SAHA chairman and partner, in an email response to Daily News questions.
International rating agencies might also use faulty quantitative criteria, or they can simply act on some other motives, he said.
“Normally Iceland’s rating must be downgraded when its debt surpasses $15 or $20 billion. The country went bankrupt with a total debt of $100 billion and had a top tier AAA credit rating.”
[HH]Global rating injustice
International credit rating firms, which decide whether a country is creditworthy, have become a hot topic during the recent financial crisis as the “Big Three” – Standard & Poor’s (S&P), Moody’s, and Fitch Group – have allegedly played an important role in exacerbating the European debt woes.
Even a billion dollar company with good financial records in Turkey can have a BBB rating at best, Seçkin said.
However, a relatively smaller American or British company with an annual turnover of $100 million, mediocre profitability and a same ratio of debt gets a top tier AAA rating, as its country has top ratings. Seçkin said the system is “a global injustice.”
When asked about the competitive power of a rather moderate rating agency based in Turkey, Şeçkin said, “Our advantage stems from ‘Corporate Governance Principles’ of the OECD [Organisation for Economic Co-operation and Development]. The main principle of the OECD work group says ‘One size does not fit all.’ That is, each country has unique circumstances, executes operations accordingly and writes its own Corporate Governance Principles.”
In some Latin American countries, it is obligatory to receive ratings from agencies outside the U.S. Security and Exchange Commission (SEC) firms, he said, implying the three leading agencies.
After acquiring a corporate governance rating license from the Capital Markets Board (SPK) in December 2006, SAHA became the first local corporate governance rating institution in Turkey, said the chairman. The rating agency received its credit rating license in September 2007.
SAHA “aims to provide reliable quality service at world standards primarily in our country and the adjoining geographical region,” according to SAHA’s official website.
Seçkin said SAHA has been preparing for sovereign ratings for the last few years. “However, it is too costly in money and time to reach up to sovereign data. That is why we have slowly made progress [on this],” he said.
SAHA provides corporate governance rating services to a total of 27 companies, making the company the market leader, said Seçkin,
TURKrating Istanbul and Kobirate are among the other local players.