Retail opportunity for Australia Ratings

Australia Ratings, a boutique ratings firm formed by a handful of former staff of Standard & Poor's, yesterday announced that the firm had secured an Australian Financial Services Licence.

The principal of the firm is Chris Dalton, who served as managing director of S&P in Australia and New Zealand from 2000 to 2008. Other directors are Mike Dontschuk, president of the Finance and Treasury Association, and Jarrod Brown, chief executive of Bennelong Funds Management.

The firm will be the only such firm to hold an AFSL that allows a firm to publish credit ratings to retail investors.

None of the major ratings agencies - S&P, Moody's Investor's Service and Fitch Ratings - opted to seek a retail licence when ASIC made this obligatory last year.
One condition of holding a retail licence is that a firm must belong to an external dispute resolution scheme, something each of the three preferred to avoid.

Corporate Scorecard, another boutique provider of credit opinions, also holds a licence that caters to wholesale investors only.

Dalton said yesterday that he would be "pounding the pavement" scouting for customers.

Few corporate borrowers in Australia have shown much interest in selling debt to the wholesale market, let alone the retail market, though Australia Ratings will cater to both niches.

Note: one of the analysts working with Australia Ratings will be Philip Bayley, a contributor to Banking Day. Philip is also publisher of The DCM Review, copy from which is syndicated in Banking Day on Mondays.