New Rating Agency project to answer long-term investors needs

Economies are constantly facing transitions: demographic, energetic, democratic, digital, evolution towards industrialisation, service-based models, growing role of the financial industry.
Sovereign States, local authorities, public agencies, development banks, long-term institutional investors are the key actors to pilot and finance such transformations.
Beyond Ratings aims at creating an augmented rating Agency to provide long term investors with a risk assessment accounting for the main performance drivers of their investments: Sovereign and public bonds, Infrastructure projects.
Three main innovations will differentiate this Agency and provide added value:

The project

An open governance

Sovereign ratings play a systemic role in risk assessment and capital allocation. As such they cannot neither rely on sole public or private initiative.
Beyond Ratings Agency’s governance has therefore been designed to ensure the contribution of stakeholders and to capitalize on the diversity of their inputs:
  • An international public (*)-private ownership
  • Publically available articles of association
  • A Board in charge to ensure the Agency economic sustainability
  • A Stakeholder Council to oversee the agency operational Management. Its comprises representatives of society: professional analysts and investors, corporate representatives, lawyers, academic experts, representatives of NGOs and foundations and government officials.
  • A Credit Policy Committee (CPC) to offer advisory opinions on the methodology of ratings and ensure the highest possible quality. The CPC would comprise internal experts (members of the Stakeholder council) and external experts (e.g. academics and industry experts).
    (*) Development banks

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The Board delegates to the Stakeholder Council its mandate to oversee operational activities. Board members therefore cannot influence anymore daily operations. The Stakeholder Council appoints/dismisses the CEO, approves the Code of Conduct, general rules, guidelines and procedures to ensure a transparent and high-quality rating process and outcome.
The Stakeholder Council appoints members of the Credit Policy Committee.

An augmented methodology

Beyond Ratings rating methodology aims at integrating more consistently all key drivers of Nations’ wealth: Human Capital, Natural Capital, Manufactured Capital and Financial Capital.
The corresponding reference framework breaks down into three main steps:
  • The valorisation of the different types of assets contributing to a nation’s wealth;
  • The characterization of the exploitation dynamic of the different types of capital during each economic cycle: efficiency, sustainability, autonomy;
  • The assessment of economy’s resilience to external shocks (climate change, commodities international prices, geopolitics, monetary policies).
Such a framework allows to:
  • Complement usual financial metrics (debt/GDP vs. debt/total assets);
  • Provide advanced indicators (trends in the valuation on natural capital, electricity consumption);
  • Identify infrastructures investment needs.

An expertise based on Collective Intelligence

Beyond Ratings will mobilize an international expertise network. It will comprise academics, research centres, foundations, and think tanks, specialized in key domains related to Sovereign risks. These experts take part to the methodological development and will be associated to the rating process.
As a rating agency, Beyond Ratings will offer the necessary framework and procedures to ensure the consistency and robustness of this collective intelligence process, especially to match financial regulators requirements.

international-expertise-network

Becoming a project sponsor

Beyond Ratings currently gathers support from a core group of sponsors to support the implementation of the Agency initial phase (2017-2018):
  • Several types of organisation can join this group of sponsors: development banks, institutional investors (insurance companies, pension funds), international cooperation bodies;
  • The sponsors will take part to the monitoring of the key steps of the Agency initial phase: methodological development, institutional promotion, economic and legal structuration (governance, articles of association, economic model);
  • A limited number of financial sponsors will be part of a core group, a larger group will be made of sponsors providing institutional support;
  • Associating sponsors to the Agency implementation will increase the initiative outreach and its relevance;
  • Sponsors will have the opportunity to take part to the Agency capital raise, late 2018.

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Becoming a project partner

Beyond Ratings aims at setting up an international expertise network. It will comprise academics, research centres, foundations, and think tanks, with internationally recognized expertise in key domains related to Sovereign risks. Partners of this expertise network will collaborate to:
  • Co-design the Agency financial rating methodology
  • Take part to the rating process
A revenue-sharing economic model will provide financial resources to support the participation of the network members to this collective intelligence process.
Targeted expertise areas are (non-exhaustive list):

Geopolitics

Public Finance

Health

Education

Innovation

Biodiversity

Climate Policies

Infrastructures

Demography

Inequalities

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