Standard & Poors, the ratings agency, has launched an
integrated ratings scale that could boost efforts to develop a
single financial market across the 10 Association of Southeast
Asian Nations (Asean) countries.
S&P, which already issues ratings on international and
local currency scales, released ratings for 19 of the
regions best-known banks and companies on its new Asean
scale, which runs from axAAA to axC.
Tom Schiller, executive director at S&P, said the
initiative had been driven in part by the general
secretariats and finance ministers efforts to
promote Asean both as an integrated financial market and as an
The new ratings sit alongside S&Ps existing global
scale and are designed to allow investors to compare bonds
across the Asean region, regardless of the currency.
Singapores DBS Bank is rated axAAA, and Bangkok Bank of
Thailand is rated axA+.
S&Ps scheme, the first of its kind, was launched on
Sunday as finance ministers reaffirmed their commitment to
economic integration by 2015.
Korn Chatikavanij, finance minister for Thailand, the current
chair of the ASEAN group, told an investor seminar in Bali:
We shall make every effort to ensure the delivery of the
roadmap for financial integration that is consistent with the
promise of a progressive and prosperous ASEAN community by
By that time, there will be free movement of goods,
services, investment, skilled labour, freer flow of capital and
equitable economic development, Chatikavanij pointed out.
The S&P pilot project will compare fixed income instruments
across the region and issue ratings based on their relative
risk of default, with a target of rating 500 borrowers in the
region by 2015.
Surin Pitsuwan, Asean secretary general, welcomed the
initiative, which he said would show the quality of Asean
assets to international investors.
But bankers were sceptical that the move would have an
immediate impact. Frank Kwong, head of Asian debt syndicate at
BNP Paribas, said it was a positive step, but that
capital controls and tax concerns still prevented international
investors from getting involved in cross-border deals.
Investors are already comfortable with credit risk,
Kwong said. It needs more of a push to develop
access. Very few bonds sold in Asean currencies go to
Calls for closer regional integration have intensified in light
of the global financial crisis. Ray Ferguson, chief executive
for Southeast Asia at Standard Chartered in Singapore, said:
The crisis has given [integration] more impetus.
When everyone individually is doing well there is less
incentive to do the hard work. The volatility means more
pragmatic conversations can happen.
But ministers ruled out the possibility of speeding up progress
towards an integrated Asean market, which has a target date of
Rosalia de Leon, undersecretary in charge of international
finance for the Phillippines, told investors on Saturday:
In this current environment it might be difficult to