Veksel

To satisfy the demand of operators for initial data which allows evaluation of the promissory notes market, in January of 1996, AK&M experts set about gathering and processing information on the promissory notes trade.

The first stage of the work was setting of a special block in AK&M-List Database, which included the quotes on promissory notes and information on promissory notes drawers and holders. Today the number of active operators, setting out the bids for the purchase/sale of promissory notes in AK&M-List already exceeds 280, and the number of issuers of promissory notes quoted on the market has reached 565.

Address data, information on management, founders, size of shareholder's equity and other information is collected and stored in the data-base for each operator. Corresponding information on the companies-issuers is supplemented by commercial and financial indices, as well as reports from the mass media and AK&M own correspondents on the current state of the business in the companies.

The next step in the creation of informational provision for the promissory notes market sector was the formation of promissory notes rating system. AK&M specialists, considering the experience of such companies as Standard & Poors, Moody's and Fitch, developed the system for formation of the promissory notes rating, adjusted for the Russian market.

In particular, besides liquidity evaluation, management, and profitability and other financial and commercial figures of the enterprises-promissory notes drawers, AK&M experts use quotations on the promissory notes from AK&M-List data-base, as well as the opinion of the experts who work in the promissory notes market for the rating.

As Russian companies’ financial reports quite often don’t reflect the real situation of the company, it makes presenting of subjective information quite valuable as well.

So, AK&M composite promissory notes rating includes:

expert rating of promissory notes, which is developed according to results of an opinion poll of stock market
rating of promissory notes reliability, developed on the basis of financial statements with respect of the number
rating of market situation based on quotations in AK&M-List

The expert rating is formed on the basis of the opinions of specialists from different companies actively working in the promissory notes market (banks, investment companies, investment funds, etc.). Respondents evaluate the promissory notes according to criteria of liquidity, profitability of issuers, and timeliness of repayment.

For each question no more than 5 issuers can be named. For the rating, the opinion of groups of experts were used, whose composition adequately mirrors the structure of the market. For example, 60% of those questioned are Moscow operators, and 40% regional operators.

In the rating of reliability, the ability of the company to make payment on a promissory notes within the appointed period is evaluated. Information from the balance sheet and statement of financial results (forms ą I and ą 2 of the financial statements) for the last complete financial year (quarter) are used for the rating. For calculation and evaluation of the additional indices, non-financial information provided by the enterprises (surveys, shareholders meetings results, etc.), data from the State Statistics Committee, and mass media reports are used.

For the reliability rating, the various indices, upon which the company creditability depends, are divided into five groups:

Indices of assets liquidity.
Indices of the effectiveness of management.
Indices of business activity.
Indices of earnings capacity.
Additional indices.

The company is included in the list of promissory notes issuers, for the rating, only in the event that it is possible to calculate the indices from the first four groups, which means the company disclose its financial statements for the last three years.

For composition of the market situation rating average indices of market performance calculated on the basis of quotations from AK&M-List are used.

The following indices are used:

verage ask offers number for the week preceding the rating;
average ask price for promissory notes with 30 days repayment term;
average ask price for promissory notes with 90 days repayment term

Issuers of the promissory notes are arranged by each of the indices, and the position of the issuers in the rating is determined by their total points in all three indices.

In the composite rating of banks promissory notes, by results of 1996, the three leaders were Sberbank of RF, UNEXIMbank and MENATEP, and the next group by attractiveness was Vozrozhdenie, Rossiiskii Credit, Promstroibank and Avtobank.

AK&M expert rating of promissory notes is updated quarterly. Composite rating is possible only for those issuers which financial accounts are available and whose promissory notes are quoted on the market.

In case the promissory notes quotations and financial accounts of promissory notes drawers are available, it is possible to conduct a complex analysis, both in narrow groups of issuers, for example united by industry branches, and for larger groups such as industrial enterprises or banks.

At present, this methodology developed is being tested for the rating of promissory notes of banks and utilities and metallurgical companies.

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