The seminar of “Role of Credit Rating” was held in Tehran Chamber of Commerce with the presence of representatives of the Capital Intelligence Institute, an agency that has been providing services regarding credit analysis and rating of corporations and evaluating worthiness of economic entities on an international scale since 1982. The seminar was widely received by concerned parties including economic activists and executives.
The speakers at the conference, hosted by Center of Investment and Consultancy Services, addressed the importance of sovereign credit ratings for countries and companies from the perspective of investors, and discussed Iran’s need to achieve higher ratings in order to sustain access to international financial markets.
At the beginning of the seminar, Ferial Mostofi, Member of the Assembly of Tehran Chamber of Commerce and the head of the Center of Investment and Consultancy Services, spoke about the activities of this Center and explained that the center was established to form a hub with the aim to match foreign as well as Iranian investors with individuals or companies that are on the receiving end of the investment chain and to assist both investors and those in need of capital throughout this process. Mostofi further explained that to meet this end the center has designed a website that offers in-depth information regarding the investment rules and regulations in Iran; introduces the thriving sectors of Iran’s economy; and presents various investment opportunities that have been identified and evaluated by the Center to the potential investors (which currently sums up to 120 to 130 projects that have been carefully assessed and chosen by Center out of large number of projects that were received by it and are now available on the Center’s website). To this end, Ms.Mostofi noted that a Memorandum of Understanding (M.O.U) has been signed between Center of Investment and Consultancy Services and Organization for investment Economic and Technical Assistance of Iran and added that, the Center of Investment and Consultancy Services, plans to set up a fund to help small and medium sized enterprises to provide guarantees for joint ventures.
The deputy director of the Organization for Economic and Technological Assistance of Iran, Dr.Jamal Hosseini, was the next speaker at the seminar who indicated that: "The access to world financial markets requires credit ratings". Pointing out that achieving 8% economic growth is possible only with the help of the private sector, he further noted that over the past few years, there have been negotiations made with some of world’s most renowned international institutions to expand their collaborations with Iran. Capital Intelligence, said Dr. Hosseini, would be a good example of a reputable international institution, which has been providing Iranian firms and companies with their services concerning credit ratings.
Dr. Hosseini added that Organization for investment Economic and Technical Assistance of Iran has set up a committee to help improve Iran's credit rating by inviting international advisory bodies, stressing that with the improvement of Iran's credit ratings, the foreign investors are more likely to come to the country.
Mr. Mohammad Reza Bakhtiari, the Deputy Head of the International Affairs in Tehran Chamber of Commerce was another speaker at the conference who noted that: "In order to attract foreign investors to the market and facilitate the growth of Iran’s economy, we should offer them a desirable condition one of the requirements of which is improving our credit ratings”.
Referring to the efforts made by Tehran Chamber to attract foreign investors to the country, Mohammad Reza Bakhtiari added: "Everyone should strive to improve the domestic business situation so that Iranian enterprises can be in a good position to enter constructive negotiations with their foreign counterparts”.
He also praised the establishment of a foreign investment services center in Tehran, adding that the center, through close interaction with the Organization for Investment and Economic and Technical Assistance of Iran, has accomplished significant achievements in helping to attract foreign investment to the country.
The next person making his remarks at the seminar was Michael Page, the director of business development at International Institute for Capital Markets. Providing a brief history of their agency, Mr. Page explained that the Capital Intelligence Institute is a privately owned company that has been founded for about 35 years and is currently operating in 39 countries. He further noted that their company has rated some 120 companies, banks and insurance companies across the world and is regulated by European Securities and Market Authority (ESMA) and accredited by central banks across Europe and the Gulf region.
He continued that the most remarkable activity of the Capital Intelligence Institute is at the MENA region, which has now expanded to include Asia-Pacific and Eastern Europe as well. Mr. Page also indicated that over the years they have gained experience in rating the Islamic banks and that so far they have ranked 11 out of the 20 Islamic banks across the world.
Referring to the importance of rating in the international market, Michael Page explained that the rating provides a credible and transparent image of any company or economic entity and facilitates access to international markets. Ratings also provide investors with the opportunity to access independent evaluations, in addition to their own assessments on the one hand, and on the other help companies to come up with more competing and reasonable pricing for their products and services. He emphasized that these ratings are very important for outside observers as well, as they promote transparency.
Also making his remarks at the conference was Yesenn El-Radhi, a senior credit analyst for sovereigns at CI Ratings, and an expert on sovereign analysis in emerging market countries, Middle Eastern countries in particular. He explained that not only CI institute is the only international rating agency that has been operating in Iran since 2006 but on top of that, CI has stayed dedicated to its commitments to Iran throughout the years and even at the times of heavy sanctions it did not allow the Western sanctions to get in the way of its collaborations with Iran.
Mr.El-Radhi, also talked about the importance of sovereign rating and elaborated on the key rating drivers which comprise of 5 parameters including that of: political and institutional risk; economic growth performance; economic growth potential; public finance; and external finance. He further presented the first public Sovereign rating of Iran that was published in 2007 and indicated where Iran stood with respect to the each of the rating drivers. He concluded that the external political developments are the main drivers of Iran’s rating outlook and explained that these external tensions can potentially harm future economic growth of Iran and jeopardies the fluidity of Iran on an international scale.
Finally, Mr.El-Radhi, also expressed the company’s interest in establishing a credit rating agency in Iran and hoped that it would be fulfilled by the end of this year.
The final speaker at the conference, Sara Haghighivand the Director Business Development in Capital Intelligence Ratings, who is also the focal point in Iran explained that in the past, Capital Intelligence has completed (rated) several entities in Iran including Tehran (Municipality) for Metro financing, Bank of Industry and Mines, Export Development Bank, Parsian and Razi insurance companies. She also said that CI is going to establish a national credit rating agency as a joint venture based on getting permits from Stock Exchange Organization, and there is other good news underway from CI's activities in Iran. Haghighivand indicated that besides all business purposes, CI is committed to help to further transparency and reducing transaction costs by cooperation with SEO.