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ACTS Post opinions with a wide range of perspectives to encourage constructive discussion.
Since yesterday, all the authorities and the media and commentators respectively have been waving from left to right the news that the global rating agency Moody’s has raised Bulgaria’s credit rating by one notch.
Link: https://www.moodys.com/…/Moodys-upgrades-Bulgarias-ratings…
However, there is no rating increase.
This: raising the grade is a lie!
Why is it a lie?
1. The communication was transmitted by the Agency’s office in Frankfurt am Main. Moody’s Analytics Deutschland GmbH (Germany)
Let’s see what the office of this agency is doing.
*** first quote of your presentation:
“Moody’s Analytics Deutschland GmbH cares for German-speaking clients from its location in Frankfurt am Main. Its clients include leading banks, insurance companies, asset managers and industrial companies in Germany, Austria and Switzerland. The business approach of Moody’s Analytics Deutschland GmbH focuses on the business areas of sales, customer service, consulting, training and marketing around the product portfolio. The range of services and products includes market leading software and consulting services as well as research and data from Moody’s Investors Service, which can optimally address business and regulatory challenges. “
*** second quote from your presentation:
“Moody’s Analytics Deutschland GmbH is responsible for direct sales of ratings and research by Moody’s Investors Service (my note: the rating unit) as a web-based application or data source, as well as the licensing of vendors outsiders in the German-speaking market. “
In other words, this is an assessment carried out by the specialized rating division Moody’s Investors Service on behalf of the German division “Moody’s Analytics Deutschland GmbH” for the needs of its German-speaking client, who, of course, remains anonymous.
In other words, this private rating is not the official rating of the rating agency “Moody’s” for the rating of Bulgaria.
2. Is the government aware of this circumstance?
Of course they know.
I give the test.
You see the screenshots – there is still the last rating for the rating, which is from August of last year – it is the old one and it continues to work at the moment despite the “feel” with a Baa2 rating. In other words, the great news about Baa1 is invented.
3. The missing letter from the experts and how much was the news made up?
Because there is still news about the qualification. The drummers in power in Bulgaria are not so stupid as to completely invent Moody’s estimates, which will cause a worldwide scandal.
But this news from the German office for its German-speaking clients IS NOT OFFICIAL, for the needs of a client, without compromising the official position of the Agency.
This evaluation is not authorized because, in addition to being private, it is also informal.
In what sense is it informal?
The rating is “(P) Baa1” (see screenshots)
This symbol (P) stands for Provisional Rating – PRELIMINARY, CONDITIONAL, INFINITE, FOR INFORMATION ONLY, UNOFFICIAL, INFORMAL.
In other words, there is no qualification change.
There is an order given by a customer (probably the final beneficiary of the contract for the purchase of said rating is Bulgarian), for whose needs something like an informal, unauthorized preliminary rating has been carried out, for which Moody’s is not responsible for an evaluation inaccurate or biased.
4. The evaluation itself is totally inadequate.
It is now autumn 2020, but all the data is from 2019. It is even mentioned that Bulgaria will enter the waiting room and then the Eurozone with its Conversion Box.
As if these people did not know that this Currency Board does not exist since the spring of this year, because the parliament repealed the relevant texts of the BNB Law.
Of course, the Agency knows, but this type of rating is specific: you get exactly and completely what you ordered and paid for.
A rating costs up to 3.5 million. Such a request for propaganda needs due to the risk of possible image accusations against the Agency is probably twice as expensive.
AND NOTES ON THE PRINCIPLE …
A) No government in the world, whatever it may be, in the current situation cannot objectively raise the rating. We have a global pandemic, a completely unpredictable factor, declining GDP everywhere, the death of entire industries, rising budget deficits, and chasing record after record debt levels.
B) After the global financial crisis, no one trusts rating agencies anymore.
Because 10 years ago I pointed out that they are in a strong conflict of interest: the person interested in obtaining a rating (as high as possible) pays them. You know the saying: whoever pays for the music, orders it.
The Bulgarian ratings are commissioned by the home government. We have already had a case in which, dissatisfied with the rating, you terminated your contract with the other global rating agency (Standard and Poors). There are no idiots to lose money and S&P adjusts quickly accordingly.
C) Moody’s and S&P paid more than $ 2 billion in penalties for misleading investors by raising the ratings on mortgage securities.
Responsible committees in the United States concluded that misleading information from the credit bureaus in question had the main merit of the 2008 financial crisis and crash.
The banks then correctly warned their clients about a sharp increase, even unacceptable risk, but the rating agencies lied to them at the time.
Moody’s announced the “review” rating on Lehman Brothers just five days before going bankrupt. Standard & Poor’s gave AIG an A rating a week before the insurance company was nationalized due to its financial backlog.
The top three rating agencies (along with Fitch) rated MF Global as high just six days before it collapsed.
The scandalous energy company ENRON, which has been falsifying its accounts for years, received the highest rating. It was shot down just four days before its bankruptcy.
D) The trick that has now been applied as a private and unofficial pseudo-rating by the national government is not a sensation. It was widely used by the Greek government.
Immediately before the collapse of the neighboring country’s finances, like Bulgaria now, it received a conditional and informal preliminary assessment, which was also increased by one degree above the existing one. Masses of carp pretending to be investors were duped and then plowed the world, but to no avail.
******
I give the floor to the propagandists-propagandists.
**** Boyko Borisov:
All this is not said by the government, but by Moody’s world experts. This evaluation
it is a great blow to our opponents. I leave you the commitment and the malice.
*** Minister of Finance Kiril Ananiev:
Aren’t we supposed to bankrupt the country? Well, these nonsense they say, those lies … liars speak! And here Moody’s says we have succeeded and provided a stable framework even in the crisis!
God, what was the exercise paid for with our money?
Aunt Pena and Uncle Ivan Hal-Haber have no financial qualifications and are not interested at all. And those who know and are interested in them do not get caught up in such primitive rods.
AND I WILL IMMEDIATELY GIVE THE WORD TO OWNERS AGAIN – TO BE HEARD IF THEY OBJECT TO THIS POST.
Grigor Lilov, Facebook
Sofia, Bulgaria
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