The results of a study to assess the feasibility of setting up a ratings agency for Arab companies are to be published within two to three months, according to Jassim al-Mannai, director-general of the Abu Dhabi-based Arab Monetary Fund (AMF). Al-Mannai said on 3 January that the AMF was carrying out the study in conjunction with another international institution, which has yet to be named.
The new agency will work on the same lines as existing international institutions, such as Standard & Poors, Moody’s and Capital Intelligence. ‘There is a genuine justification to explore the viability of such an institution,’ Al-Mannai said. ‘There is a serious need to develop the capital markets of the Arab world, and for this to happen investors and creditors need to be made comfortable about their investment.’
The agency would offer a ratings service to small and medium-size companies, few of which are able to afford the fees charged by existing institutions. This will give the companies greater transparency and enable them to tap both foreign and local markets, Al-Mannai said. The location of the agency is also being considered in the study.