CBA Re-Rates 6 Enterprises

CBA RE-RATES 6 ENTERPRISES

Noyan Tapan
March 25, 2008

YEREVAN, MARCH 25, NOYAN TAPAN. The Central Bank of Armenia (CBA) has
re-rated six enterprises. According to the CBA press service, ratings
have been assigned to the following enterprises: Lusakert Poultry
Factory LLC – B- rating (previous rating C+), Renco Armestate LLC – B-
(C), Yerevan Poultry Factory OJSC – C+ (C), Yerevan Hotel OJSC – C
(C-), Mill AG CJSC – C (C-), and Royal Armenia joint venture LLC –
C (previous rating C-). Until now 36 companies have received CBA’s
ratings from B+ to D.

The CBA assigns ratings to enterprises by assessing the values of
the qualitative indices of their credit history, financial position
and activity based on a five-point system and then summarizing
the results. The highest rating is A, while the lowest one is
F. Enterprises with a score of 4.9 and higher receive A+ rating,
those with a score of 4.75-4.9 receive A rating, with a score of
4.6-4.75 – A- rating, with a score of 4.45-4.6 – B+ rating, with
a score of 4.25-4.45 – B rating, and enterprises with a score of
4.1-4.25 receive B- rating. F rating is assigned to enterprises with
a score of 2 and lower.

During the signing of repo agreements with banks, the CBA is ready
to take as a security the bonds issued by enterprises with A, B and
C ratings. The CBA has established a privileged scale for weighing
the risks of banks’ assets – for credits given by commercial banks to
enterprises with a high rating, as well as for the purchase of bonds
of enterprises with a high rating by commercial banks. It encourages
banks to provide credits to enterprises with a high rating and to
buy their bonds.