OREANDA-NEWS. December 1, 2010. Credit-Rating has published data on probability of defaults by the national rating scale. Each rating category corresponds with the level of probability of default ranging from 0% (the highest uaAAA and uaAA ratings) to 47.1% (for uaCCC and lower). These data are based upon actual yearly average statistics of defaults that have occurred in the past 5 years by bond issues rated by the agency. The actual yearly average rate captures the number of defaults that occurred in each year broken down by ratings, weighted by yearly average number of obligations with similar ratings for the 5-year period.

Probability of defaults by the national rating scale

The majority of issuers with similar credit ratings bear similar credit risks, which realization results in their failure to meet commitments towards investors. The statistics of defaults compiled by Credit-Rating for the 5-year period allows for assessment of probability of defaults by outstanding debts rated by the agency. According to Credit-Rating CEO Stanislav Dubko ‘by applying data on probability of defaults by the national rating scale, investors may quickly evaluate risks associated with investing in bonds and other debt obligations in Ukraine and mitigate possible losses from investment activities’.

Credit-Rating was the first in Europe to publish probability of defaults by the national rating scale. This was possible due to statistics of defaults which has been compiled over a long period of time by over 1100 credit ratings. Earlier the information on probability of defaults was published by only leading international credit rating agencies exclusively by international credit ratings. The emergence of statistics of defaults in national markets by national rating scales has been hampered by short track records of the majority of national credit rating agencies and their small scales, which resulted in unavailability of statistically worth data bases.

Credit-Rating agency has operated in the Ukrainian market since 2001 being committed to assignment of the national scale ratings. The agency has assigned 1109 ratings. As of November 1, 2010 Credit-Rating maintains monitoring of 616 ratings, in fact 459 of corporate, 103 of financial and 54 of municipal sectors.