The importance of credit ratings and competitiveness

A leading international ratings agency says it expects the next European Commission to continue prioritizing the EU’s competitiveness and the digital and green transition, alongside defense, security, and immigration issues, writes Martin Banks.

The issue is particularly timely as MEPs meeting in Strasbourg this week, their first plenary since the summer break will discuss the formation of the next Commission.

Also on the parliamentary agenda this week is a major report on competitiveness in the European Union, drafted by former ECB president and ex Italian PM Mario Draghi.The report outlines his plans to boost innovation, relaunch industrial competitiveness, upgrade trade policy, accelerate decarbonization and strengthen defence. Draghi will address MEPs on his report on Tuesday (17 September).

S&P Global Ratings, an American credit rating agency (CRA), says the EU’s revised fiscal rules maintain the previous upper limits for government budgetary deficits at 3% of GDP and government debt at 60% of GDP. It says that, since the EU’s energy bill is still 2.5% of GDP higher than in the U.S., further energy market integration remains key in the EU’s drive to improve its overall competitiveness.

The agency says that, generally speaking, it expects the next European Commission’s roadmap to borrow heavily from the 2024-2029 Strategic Agenda that the European Council adopted on June 28, 2024, ahead of the upcoming appointment of a new European Commission.

Elsewhere, AKFA Aluminum LLC (Akfa), one of the largest private industrial companies in Uzbekistan, has received a first-time S&P Global rating of B+/B with a “stable outlook.”

Credit ratings are forward-looking opinions about the ability and willingness of debt issuers, like corporations or governments, to meet their financial obligations on time and in full.

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They provide a common and transparent global language for investors and other market participants, corporations and governments, and are one of many inputs they can consider as part of their decision-making processes.

S&P Global credit ratings are among the most respected globally.

Receiving a credit rating from an agency that is one of the “Big Three” is seen as an important step in the further transformation of AKFA Aluminum LLC, the largest manufacturer of aluminum and PVC profiles in Uzbekistan.

In its publication, S&P Global praised AKFA’s “dominant franchise on the rapidly expanding Uzbekistan building materials market” and “the group’s well-invested asset base and substantial automatization”.

The rating follows a “rigorous” assessment of the company’s financial and commercial position, and provides an independent benchmark of the its reliability as a borrower.

Business reforms in Uzbekistan are seen as having enabled the country’s leading companies to access international financing opportunities and explore foreign markets. In this regard, Akfa Aluminium says it is successfully revising its existing processes to follow international best practices in corporate governance, financial reporting and ESG.

Bakhodir Abdullaev, CEO of Akfa Aluminum LLC, said that receiving a credit rating opens a “new stage” in the company’s development.

He told this website, “The credit rating from S&P Global opens up new opportunities for AKFA Aluminium to expand its business, attract foreign investment and strengthen its position in the global market. In addition, it gives the company access to international capital markets, which will allow it to attract the necessary resources for further growth.”

CFO of AKFA Aluminium LLC Sirojiddin Khayrullaev added, “This moment follows months of hard work by the team at Akfa Aluminium as we work to align ourselves with the best global standards of corporate governance”.

Founded in 2000, AKFA’s enterprises employ about 8,000 people and its products are exported to more than 30 countries, including the United States, Canada and the EU, CIS and MENA countries.

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