Agency News / 09.10.2014

AK&M Rating Agency develops a credit rating methodology for bond funds

On October 7, 2014, the Rating Committee of CJSC AK&M Rating Agency considered and approved the credit rating methodology for bond funds.

Overall, the credit rating of a bond fund results from a comprehensive evaluation of its ability to fully and timely meet its obligations to shareholders (investors) on the short-term and medium-term horizons.

The credit rating reflects the AK&M Rating Agency experts' opinion on the credit status of an investment fund as of the rating assignment date. The rating assigned may later be upgraded or downgraded, or withdrawn based on the regularly monitored performance of the rated entity.

The new methodology may be used to rate both equity and mutual investment funds. The key rating requirement is that the investment fund's pool of assets mainly consists of bonds. The methodology is also applicable to indexed investment funds that form their pools of assets based on the bond index.

The methodology comprises a number of criterion rules (structured as tables, charts, algorithms, etc) of scoring, by calculating points, specific credtitworthiness parameters grouped as follows: matters of structure, organization, finance and regulation.

Rated funds qualify as accessible and transparent entities. A high credit rating may be an argument for investing funds of institutional and strategic investors such as NPF pension accruals, insurance companies' reserves, etc.