What we pay the ratings agencies
DA SHADOW Minister of Finance David Maynier managed in Parliament this week to convince Finance Minister Malusi Gigaba to declare the amount paid to ratings agencies S&P Global Ratings, Moody’s and Fitch.
According to Gigaba S&P was the highest paid, followed by Moody’s and Fitch.
Gigaba revealed that the government also paid a Japanese agency, Japanese Ratings and Investment Information, for services rendered.
“Since April 2008 to last month, a total of R81 451 873 has been paid to the ratings agencies,” Gigaba said.
Business Report recently interviewed Gigaba on the impact of ratings on the wellbeing of South Africa. On a question whether the minister was aware of the various legal cases against S&P in the US, Gigaba replied: “We are aware of the lawsuit that is in the public domain tied to the 2008/09 global economic crisis.
“The US government brought a case against S&P in 2013, arguing that the ratings agency defrauded investors. In 2015, S&P was fined $1.5 billion (R19bn). So far South Africa has not instituted any litigation against ratings agencies.”
S&P is paid for rating of long-term debt issuances, rating of short-term debt issuances as well as rating of the commercial paper and medium-term notes.
Moody’s is paid for annual and quarterly credit surveillance and rating of all non-US medium- term notes programmes, ratings of all US medium-term notes, rating of all global medium-term notes programmes, rating of all commercial paper/short-term; and rating of all long-term debt issuances and mediumterm notes sales in all markets including local currency debt issuances.
Fitch is paid for annual surveillance, rating of debt issuance; and expense reimbursement for reasonable travel and lodging expenses incurred during the annual rating mission to South Africa.
Gigaba would not say when the Brazil, Russia, India, China and South Africa (Brics) Rating Agency will be launched,.