Economic expert Hani Abul Photouh commented on the secrecy of the attitude of rating agencies towards Egypt after the recent Standard & Poor’s rating and the change in the outlook for the Egyptian economy to “negative”.
Abul Photoh said in statements to RT: “International credit rating agencies are among the main institutions that evaluate the ability of countries and companies to pay their debts and maintain financial stability. Among the major credit rating agencies known around the world, one can name the Fitch Rating Agency, Moody’s Credit Rating Standard & Poor’s, Fitch, Moody’s, Standard & Poor’s together make up the so-called “Big Three” credit rating agencies in the world and are one of the largest and most important credit agencies in the world.
He continued: “In truth, it cannot be said that international rating agencies enjoy absolute honesty in their work. While rating agencies follow strict criteria for determining credit ratings, they are not free from financial and political interests and biases.”
He explained: “Rating agencies may have commercial and financial relationships with rated institutions and this may affect rating decisions. In addition, some agencies have conflicting interests as some of them provide advisory services to rated companies, in addition to providing credit ratings, which raises questions about conflicts of interest.
He noted that it is important to note that credit rating agencies also face challenges in valuing complex assets such as mortgage-backed securities, which caused the global financial crisis in 2008. These agencies sometimes rely on insufficient or inaccurate information to draw conclusions. solutions A classification that can lead to a misclassification.
It is worth noting that many fines and penalties have been imposed on international credit rating agencies, including:
1- US$1.4 billion fine to Standard & Poor’s in 2015 due to misclassification of mortgage-backed securities during the global financial crisis.
2- $125 million fine to Fitch in 2021 for providing misleading ratings to Chinese institutions.
3- €16.25 million fine against Moody’s in 2016 due to the delay in announcing the change in Greece’s sovereign debt rating.
4- Fitch was fined $3 million by the US Securities and Exchange Commission (SEC) in 2012 for failing to provide unbiased ratings for mortgage-backed securities.
These fines and penalties show that there are various challenges facing rating agencies and that it is important to monitor and oversee their performance in order to maintain the integrity and transparency of their ratings.
He noted that the bottom line is that credit rating agencies strive to maintain the highest standards of honesty and transparency in their work, but they are not exempt from the risks and challenges that could affect their ratings.
Cairo – Nasser Hatem
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