ASEAN credit rating agencies (CRAs) met with their regulatory counterparts in Bangkok during the annual meeting of the ASEAN Forum of Credit Rating Agencies (AFCRA). The CRAs and the regulators discussed ways they could corporate to aid the development of capital markets in AFCRA member countries.
As acting secretariat for 2000, Thai Rating and Information Services Co., Ltd. (TRIS) hosted the meeting this year in Bangkok on 11 November 2000 which brought together the six rating agencies and their regulators from four ASEAN nations. The regulators for AFCRA's four member countries are Capital Market Supervisory Agency (BAPEPAM) from Indonesia, the Securities Commission Malaysia (SC), and the Securities and Exchange Commissions (SEC) of the Philippines and the Securities and Exchange Commission (SEC) of Thailand. AFCRA comprises Rating Agency Malaysia Berhad (RAM), Malaysian Rating Corporation Berhad (MARC), Philippine Rating Services Corporation (PhilRatings), PT Kasnic Duff & Phelps Credit Rating Indonesia (DCR-Indonesia), PT Pefindo Credit Rating Indonesia Ltd. (PEFINDO), and TRIS.
During a morning panel discussion, representatives of the four regulatory bodies made several suggestions of how CRAs can cooperate with regulators, according to Dr. Warapatr Todhanakasem, President of TRIS. He said the regulatory institutions expect CRAs to provide high quality and easy-to-access rating information that investors can use to identify credit risk and to distribute that information widely. Educating the market about credit rating is another important task of CRAs the regulators said, according to Dr. Warapatr. They also expect CRAs to develop their rating methodologies and criteria to keep pace with changes in the market and to develop new products to match the changing needs of investors. Dr. Warapatr added that the regulators adjoined the CRAs to adhere to the highest professional standards and to remain independent and financially viable. This way regulators said their support for the CRAs would always be implicit.
After relating the expectations of regulators for CRAs, Dr. Warapatr pointed out that AFCRA members have already been implementing many of these expectations. For instance, he said, AFCRA members had worked together to develop rating methodology and criteria. AFCRA members had also agreed with the regulators that good corporate governance should be emphasized and included in rating criteria as a tool to improve Asian corporations, Dr. Warapatr said.
Mr. Santiago F. Dumalao, Jr., President of PhilRatings, called for the regulators to support AFCRA members by mandating the rating of bonds since the future development of the regional debt market has to depend on intervention and support from the regulators. The regulators replied that while they fully supported domestic CRAs, the trend toward globalization was forcing local CRAs to improve their quality to compete with the international CRAs and to meet the investors' expectations.
Dr. Warapatr also said that AFCRA members used the annual meeting to discuss their continuing cooperative activities, including developing an AFCRA website, members' new practices, and the AFCRA annual training course, which TRIS will host in February next year. The training will focus on "Project Finance Rating." - End