Russian Central Bank Bans Western Ratings Agencies

Tyler Durden's picture

On the heels of last week's downgrades by Fitch and Moody's to just above junk status, The Central Bank of Russia (CBR) has issued a statement that it will no longer use credit ratings from Standard & Poor’s, Fitch, or Moody’s that were assigned after March 1, 2014. All credit ratings will now be at the discretion of the Board of Directors of the Bank as regulators assess whether or not the ratings made after March are accurate. Sounds like Spain, Greece, and USA's previous derision over ratings agencies proclamations is heading east.

As RT reports,

The Central Bank of Russia will no longer use credit ratings from Standard & Poor’s, Fitch, or Moody’s that were assigned after March 1, 2014.

 

All credit ratings given to Russian companies and banks will now be at the discretion of the Board of Directors of the Bank, according to a press statement Monday. The regulator will assess whether or not the ratings made after March are accurate.

 

The decision comes after Fitch and Moody’s downgraded Russian sovereign debt to just above junk status. Standard & Poor’s will decide whether it cuts Russian debt to junk level by the end of January after cutting it last April, after Crimea rejoined Russia and the West began to levy sanctions against Moscow.

*  *  *

Full CBR Statement:

On dates of credit ratings’ use for the purpose of Bank of Russia regulations

 

In line with scope of authority established by Bank of Russia Ordinance No. 3453-U, dated 25 November 2014, ‘On the Specifics of Credit Ratings’ Use -to Implement Bank of Russia Regulations’, the Bank of Russia Board of Directors determined the dates when credit ratings shall be assigned to implement Bank of Russia regulations.

 

Under this Ordinance, should any Bank of Russia regulation contain information on credit rating assigned by Standard&Poor’s or Fitch Ratings or Moody’s Investors Service to credit institutions or other Russian legal entities, constituent territories, municipal entities, their issued securities or other financial instruments, the date when the mentioned rating is assigned (hereinafter, the rating date) may be determined by the decision of the Bank of Russia Board of Directors in the corresponding regulation.

 

According to Bank of Russia Board of Directors’ decision, the rating date for credit institutions and their issued financial instruments, including securities, to implement Bank of Russia regulations, shall be 1 March 2014; as for other entities, listed in the Ordinance, and their issued securities, this rating date shall be 1 December 2014.

*  *  *

Ben Aris recently noted:

“They’re private companies, so we assume that they’re completely independent and not subject to political pressure.

 

However, they do exist in an American context and are subject there to the international media’s reporting which tends to give a single narrative – a very negative narrative when it comes to reporting – particularly the Russia story,”

All sounds very similar to the responses that troubled and over-indebted western nations had when the ratings agencies dared to downgrade them.

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IridiumRebel's picture

They're useless anyway....

El Vaquero's picture

Useless?  They made it a lot easier for the likes of GS to pawn off a lot of "shit" MBSs to investors while GS turned around and purchased a lot of CDSs from AIG on those very same MBSs.

cossack55's picture

IR may have meant they are useless to REAL humans.

El Vaquero's picture

Well, they are useful to our reptillian bankster overlords. 

Publicus's picture

World War 3 is coming as part of the Crisis of 2020.

El Vaquero's picture

2020?  We could last until 2022 or 2023.  I acknowledge those dates as a sort of theoretical limit.  Not as a real limit.  I say that you, sir, are an optimist. 

Four chan's picture

we suspended marked to market in 2008 so what do ratings mean anyway? at least where banks are concerned.

Manthong's picture

Credit.. Credit Ratings

The bankers shackles around the necks of submissive countries, companies

and individuals.

suteibu's picture

More to the point, if you do not like the reality created for you by others (in this case, the US/Western banks), create your own.  Arguably, your new reality will be just as, if not more, valid than the previous. 

The reality created by the Chinese-Russian interests may be more attractive to a lot of other nations around the world than the current US-dominated reality.

Something to think about on a personal level as well.

El Vaquero's picture

 

Something to think about on a personal level as well.

But don't forget to earn enough FRNs to pay your property taxes. 

Caviar Emptor's picture

Coming Soon : Islamic ratings agency to counter western hegemony

Mountainview's picture

The Chinese have theirs already. Rating is a political act.

Ignatius's picture

I rate Russia fair to middl'n.

Againstthelie's picture

A long overdue step to ban these criminal organizations. Sadly only few souvereign countries are left on the planet which can dare to that.

A few numbers showing the ridiculous fraud these three rating agencies are and how they have unmasked themselfes now, with downgrading Russia to above junk level.

Decide yourself if a country with that financial solidity should be rated above junk:

Debt to GDP: 13%.

Positive trade account.

November unemployment rate rose (like every winter) from 5.1% to 5.2%.

November retail sales rose 1.8%, after 1.6% previously.

National reserve fund raises to 4.39 bn RUB from 3.89.

Public finance October surplus raises to 1.59 bn RUB after 1.54 bn RUB previously.

Nov. trade balance surplus of 13.4 bn USD (Moody's estimation: 11 bn LOL!), after 14.2 bn USD previously.

 

If this is above junk level, what rating the USA and UK should have?

I think everyone looking at the numbers immediately recognizes that the rating agencies are WEAPONS of FINANCIAL WARFARE, but they cannot be trusted.

Long overdue that countries begin to ban them!

One should not forget, that it were these institutions that rated the Goldman Sachs and JPM mortage garbage AAA.

The world needs to be liberated from the Angloamerican City of London and New York financial fraudster system.

Ghordius's picture

World War One was fought under the assumption that the losers would pay for the war. Otherwise would have been impossible to fight, due to the costs in ammunition (and lives, but they are not counted, in the world of finance)

World War Two was fought because of that assumption that the losers would pay for the previous Great War, and about who would tell the losers what to pay. Then it costed even more both for the victors immediately and then for the losers, for decades

but at least the Pax Britannica lived on, in the form of Pax Americana

now... World War Three... how do you even think about who could even finance such a thing? CONSIDERING THAT THE VICTORS USUALLY HAVE TO REBUILD WHATEVER THEY BROKE?

considering that nobody in real life instead of dreams and Hollywood ever wages war without a profit in mind. nobody. ever. no profit, no war

repeat after me: Iraq costed one trillion. Iraq costed one trillion. Iraq costed one trillion

there is not enough money in the world for a new world war

El Vaquero's picture

WWIII, or at least the brilliant and brief end of it, has already been paid for.  Just pray that we don't blunder into it.  Just remember, the neocons in the US are insane.  Good Luck.

tired1's picture

Ever hear of Massada or the Sampson option?

earnulf's picture

I think you are proceeding from the false assumption that any "winners" in a war would want to rebuild the losers.   Fact is, many of the potential "winners" might be just as happy to keep a jackboot on the neck of the losers, rather than give them relief.

Do you really think Japan or Germany would have be "helpful" in rebuilding those countries they invaded?   Really, only the US seems to like tearing something down just so they can rebuild it for them.    

If the winner were China or Russia, do you really think they would come up with a "marshall" plan to rebuild the US?  

suteibu's picture

Look at the improvements to Korea under Japanese domination.  The US did the same in Japan after the war.  To call that benevolence is debatable.  The US has greatly benefited by making Japan it's "unsinkable battleship" in Asia.  Okinawa is still under US occupation from the viewpoint of the Okinawans.  And Japan has had two decades of economic boom followed by two plus decades (and counting) of economic bust since the war. 

The US does not help anyone except when it benefits the US.  That Japan has also benefited, while serendipitous, is incidental to the US efforts and intent in Japan.

IridiumRebel's picture

Yes. Vampires do have use for them, though.

RaceToTheBottom's picture

Who used them anyway, except possibly as a contrary indicator.

Everything related to WS should be avoided at all costs.  Think of it as Risk abatement.

Anusocracy's picture

Better your own apparatchiks than your enemies'.

Max Steel's picture

This is in fact good for Russia for two reasons.
1) Russia is not insolvent, quite the opposite. Russia has huge assets it can now play into its advantage. If Greece or Ukraine are downgraded, it pushes the cost of borrowing up thereby accelerating the spiral into default. Russia is not making new debt, so the increased cost do not matter.
When the agencies downgrade Russia they are mainly downgrading existing assets held by Western banks. These banks are the biggest losers. The lower grade is a reflection of the perceived risk of war with Russia - economic or hot. In fact, sanctions may be enough to stop Russia paying.
Companies still need financing, but they are barred from the Western markets anyway. If a Russian company would need to refinance its loan and cannot do so because of sanctions, they can simply argue force majeure and defer payment.
2) Chinese rating agencies are not downgrading Russia, instead they rate Russia in the highest grade. This reflects the fact there are no political obstacles to Russia paying China in full, even in the case of hot war over Ukraine.
What Russia and Russian companies can now do is refinance their outstanding loans with new money from China with a low interests based the high Chinese rating. As the Western loans will be trading at a discount due to the low rating, they can buy back their outstanding debt at maybe 70 cents to the dollar.
It could in fact be a Russian strategy to spread us much FUD (fear, uncertainty and doubt) into the West as possible. The fear is not unfounded; if a shooting war starts, the West might lose their assets completely.

All three major Western "ratings agencies" were proven to be frauds a few years ago. Moscow merely needs to reference the following:http://www.reuters.com/.../ratingagencies-rulings...

Aeternus's picture

This is it, no fuckin' around anymore, world war three is imminent!

https://www.youtube.com/watch?v=yloaBw80fV4

Ignatius's picture

I just sh*t myself....

So is that "thumbs down" to 30 yr bonds? I like to hold to maturity.

 

/s

Max Steel's picture

 If you look at the stock market, no, growth will be strong. if you look at the bond market, the US is heading into a recession. One of them must be wrong. Take your pick, though, in my personal experience, the bond market is a lot smarter.

post turtle saver's picture

"whaah whaah, they only tell us what we need to hear, not what we want to hear... ban them!"

not saying Russia has a monopoly on this behavior, you could insert XYZ in their place when it comes to audits and that's the typical reaction you'll get...

IridiumRebel's picture

"Thus the agencies became the de facto watchdog over the mortgage industry. In a practical sense, it was Moody’s and Standard & Poor’s that set the credit standards that determined which loans Wall Street could repackage and, ultimately, which borrowers would qualify. Effectively, they did the job that was expected of banks and government regulators. And today, they are a central culprit in the mortgage bust, in which the total loss has been projected at $250 billion and possibly much more."

-NYT

SumTing Wong's picture

Can't trust those "objective" parties. 

We love you, Sean Egan.

TheFourthStooge-ing's picture

Apparently both the Chinese and the Russians, when putting together their own new ratings agency, thought well enough of the credibility and integrity of Egan-Jones to make the firm their third partner.

Counterpunch's picture
Counterpunch (not verified) Jan 19, 2015 12:34 PM

I wouldn't let those agencies value my kid's shitty diaper.

GMadScientist's picture

"It's money-good collateral!"

BorisTheBlade's picture

Why? They rated much worse shit AAA.

medium giraffe's picture

Investment grade mobile homes with fantastic insurance deals! Look over there ----->  was that Elvis?....

 

x*'AAA'*x !!!

[/ta da]

Kaiser Sousa's picture

so long mother fuckers...

 

fuck off mark zndi u bitch.

cossack55's picture

Roger that, and BTW, screw banning. I'm sure the Russkies still have some small nukes they can deliver to said agency HQs.  Would be doing us all a favor.

screw face's picture

The Bear is Bullish.

Alex Zhyk's picture

Kremlin loyalty rating forever!

wmbz's picture

These "ratings" agencies are a complete farce! Another part of the grand illusion.

If any one of these agencies even whispers a down grade of any big dog banks here in the USSA they are bitch slapped back in line.

FUBAR and getting more FUBAR!

SmittyinLA's picture

Look for the Japs to agree (indirectly) the Koreans already left they got their own gig  

deeply indebted's picture

The "isolation" of the West continues unabated.

KnuckleDragger-X's picture

I'm not sure that this is a good idea but it is surely an interesting one.....

nah's picture

hyper modern civilization

.

lead follow or get the fuck out of the way

localizer's picture

Finally! I do wonder though - for how long is the world going to take the "opinions" of these bogus rating agencies? I mean - FFS, these were the SAME people who gave tripple AAA to Lehman JUNK 2 DAYS before the collapse! Of course they were not responsible since "it was just an opinion"... what a joke!

Salsipuedes's picture

It couldn't happen to a nicer, better dressed bunch of frauds.

Smiley's picture

They should be banned here to!

Who in the world is still actually gullible enough to believe a single word coming from those sociopaths?

Liquid Courage's picture

HFTs? And "gullible" is not exactly the right word.