Iran to get sovereign rating within months

Published in MEED, 10 March 2016

A rating will help Tehran access international capital markets

Iran could have a sovereign rating within the next few months according to industry figures, marking an important point in its return to the international mainstream.

The authorities in Tehran are understood to be in discussions with the three main ratings agencies and industry executives expect one or two of them to be given the go-ahead in the near future to prepare a rating.

The move would allow the Iranian government to access international capital markets and, more importantly, provide a benchmark for other corporate issuers in Iran. At the moment, in the absence of any ratings agencies, local banks in Iran provide guarantees for corporate bonds, but formal ratings would allow companies to access the debt market in a more straightforward fashion.

Iran has not had a sovereign credit rating from any of the big three agencies for at least eight years. Fitch Ratings withdrew its rating in 2008. At the time it gave the country a long-term foreign currency rating of B+. Moody’s Investors Service rated Iran at B2 from 1999 to 2002. Standard & Poor’s (S&P) has never rated Iran.

A Fitch executive confirmed that his company is in discussions with the Iranian authorities and that its team of sovereign analysts was “ready to go”.

If a deal is agreed, the task would be carried out by Fitch staff in London and possibly Hong Kong and it is likely to take six to eight weeks to do the necessary work, meaning the rating would be issued “hopefully by the summer” he said.

Fitch says it will be careful not to involve any US staff in the work, given the ongoing US sanctions which bar American citizens from involvement with Iran’s financial sector.

S&P and Moody’s both declined to comment on whether they were in talks with the Iranian authorities.

Any move to provide a new rating will be welcomed by the financial community within Iran. “Before sanctions, the government was rated [and] some of the Iranian companies – automakers, industrial companies – were rated. We hope to see that soon,” said Majid Zamani, chief executive of Kardan Investment Bank, speaking at the FT Iran Summit in London on 9 March.