This history shows that current dominating rating agencies unavoidably have Western attributes. They represent the unchallengeable impact Western nations exert on the global economy. Such a condition results in a biased approach when the agencies assign ratings to bond issuers from emerging nations like BRICS members. Over the past decades, emerging economies impressed the world with rapid economic progress.
With their GDP shares declining from a global perspective, Western countries’ endorsement has become less persuasive to emerging nations. While these rating agencies spare no efforts to maintain their monopoly, emerging BRICS nations look for favorable rating assessments to better scale up economic growth. Conflicts between them have, therefore, become unavoidable.
This can be seen from recent moves of downgrading credit ratings of BRICS member nations. Fitch lowered Brazil’s sovereignty credit rating to BB+ from BBBIN December 2015, and further downgraded it in May 2016. Since 2016, only Fitch among the big three has assigned an investment-grade rating to Russia. In April, Standard & Poor’s and Fitch successively labeled South Africa’s state debt as junk following the nation’s domestic political reshuffle. Even China’s stable outlook was changed to negative by Moody’s and Standard & Poor’s during the past year. India’s ranking was even worse, resulting in its domestic media’s widespread criticism on the rating agencies bias against India in assigning a rating. In fact, all the five members of BRICS have questioned the way in which the three agencies operate with double standards and entrenched political bias. rating approaches. For example, as they may not have full access to first-hand information on countries they are rating, the agencies may come up with totally different rating results for the same country. During the European debt crisis, the financial condition of some European countries was evidently worse than BRICS nations. However, they still obtained positive ratings. Suspiciously, such results were reached with double standards. Democracy or free election is also one of the key factors in deciding the sovereignty credit rating. This is an evident ideological bias.