Dubai: Standard & Poor's Rating Services on Sunday launched a new regional credit rating scale for the Gulf Cooperation Council.

The new region-specific rating scale is targeted at debt issuers in local currencies.

"By creating a regional rating scale we are allocating more rating symbols that would capture the entire risk spectrum which would give a clearer picture for of lenders and investors," Rob Richards, Criteria Officer, Corporate and Government Ratings told reporters yesterday.

Regional scale ratings could be assigned to any GCC-domiciled issuer including corporates, banks, insurance companies and sovereigns at their request and would be identifiable by the prefix "gc" (for example, gcAA+).

Although the rating scale offers a wider spectrum with several sub-segments to each rating symbol, S&P said the core rating criteria for its global ratings and regional ratings are identical.

Local currency debts

"The criteria used by S&P to analyse business and financial risk are the same for both the regional and global rating scales," Richards said.

"However, while global scale ratings are assigned based on a comparison of credit risk among issuers and issuances located all over the world, the GCC regional scale will focus on comparing credit risk relative to Gulf issuers and issuances only."

S&P officials said the launch of regional rating scales are not related a few recent cases where companies such as Dubai Holdings Commercial Operations Group and Emirates NBD opted to part ways with S&P ratings.

"S&P started developing the GCC regional scale in early 2008, when local currency debt issuance was quite high," said Jan Willem Plantagie, Middle East Regional Manager at Standard & Poor's.

"The difference of opinion with entities we rate is not anything altogether new or specific to Dubai or Gulf.

"It could happen anywhere else we operate. In fact it has happened in several other countries and regions in the past."

S&P expects the local currency debt issues to pick up pace this year after a brief lull in the last quarter of 2009.

"Although local debt issuance peaked in 2006-2008, we expect a resurgence in local currency issuance over the coming years, driven by large financing needs for infrastructure development," said Plantagie.

Asean

Similar to the new GCC scale, S&P has a scale for Association of South East Asian Nations (Asean) and 15 national rating scales.

More than 65 ratings have been assigned on the Asean regional scale since its launch in May last year.

The GCC scale is designed to cover a wide range of funding instruments issued in local currencies including capital markets debt, project finance debt, bank loans and Sharia-compliant structures.