Kyiv, August 21 (Interfax-Ukraine) – Oleksiy Plotnykov, MP from the Regions Party, the largest party faction in the Ukrainian parliament coalition, has said he believes that only companies with a credit rating should participate in privatization in Ukraine and tender-based purchases worth over UAH 1 million.
"A legal entity without a current investment-level credit rating according to the national [rating] scale cannot buy a facility offered for privatization," reads a draft law on state regulations on the rating services markets, which was registered at the Verkhovna Rada this week.
Plotnykov suggests, among other things, that a credit rating should be assigned to all insurance companies that provide services to individuals, and if an insurance company has no credit rating, it should not be allowed to own debt securities. Moreover, reads the draft law, if banks have no rating, they will be able to attract deposits from individuals only to the sum of their regulatory capital, and in case of credit unions – to the sum of their own capital.
The lawmaker also suggests that if a company applies to be included into a stock exchange listing of the first level, it should have been assigned a credit rating, and if it applies for a second-level listing, the applicant should possess an investment-level rating.
The draft law bans the circulation of securities of unrated joint investment institutions.
At the same time, Plotnykov called for a reduction in the number of rating agencies. In particular, he said that only a company with at least five years of uninterrupted experience in providing paid rating services according to the national rating scale could apply for the status of an authorized national rating agency.
What is more, the MP proposes that such status could be given to a rating agency if it has assigned at least 200 credit ratings on a paid basis: 50 ratings each on securities, to financial institutions, companies, and local authorities; and the rating agency should be a co-founder of a publication that will publish ratings.
To get the status of an authorized agency, an international rating agency should operate a Ukrainian national scale, representative offices or branches in at least 10 countries, as well as have at least 500 assigned ratings: 50 in every country where the agency is represented, including 50 ratings in keeping with the Ukrainian national scale.
Theoretically, the conditions stipulated in the draft law are met only by the Credit-Rating Agency, which was the only Ukrainian authorized rating agency between 2004 and 2010.
The State Commission for securities and the stock market of Ukraine only in spring 2010 was able to complete the tender, launched in 2006, to select other rating agencies, as the tender had long been blocked in the courts. As of today, the status of an authorized rating agency has been assigned to three more Ukrainian agencies. Ratings from three leading international rating agencies can also be used Ukraine, although the commission minimized the obligation for getting ratings to ease tension on securities issuers in 2009, when confidence in ratings declined worldwide.
