Главная » 2009 » Май » 9 » The Moscow TimesS&P Director Rates Moscow Colors
The Moscow TimesS&P Director Rates Moscow Colors
In her office overlooking a red brick church and part of the Kremlin, Cynthia Stone
faces a canvas in which vaguely human figures in pulsating blues and reds stand out
against a snow-covered landscape.
It is hard not to see this as a metaphor for Standard & Poor's in Russia, and
particularly for the agency's managing director here.
S&P was the first of the Big Three rating agencies to open an office in Moscow, back
in July 1998. Rival Fitch opened an office this past April, while Moody's has a
presence here only through its domestic partner, Interfax Ratings Agency.
A month later, the market collapsed -- but not because of the new office, S&P insists.
The financial sector was hit especially hard. "The only people that were doing any
business were the moving companies, moving all the investment bankers and a lot of
foreigners out of the country," Stone recalled.
Just the time, then, for S&P to announce an expansion, with affiliation to EA Ratings,
which was at that time the country's only domestic credit agency.
"The media were just incredulous," Stone said with visible pleasure, adding that S&P's
news provided a psychological boost amid that gloomy September five years ago.
Stone has made people incredulous before. She was one of the few Americans who
ventured into the former Soviet Union, first coming with a student exchange program
in 1969. She came back in the 1970s, working as a tour guide and participating in film
She has trouble placing the roots of her interest in Russia. But it is clear that she sees
the country differently from most foreigners. "One of the things that most attracts me
about living in Moscow -- and this may sound strange -- is the vibrant colors," Stone
said. There is a special color palate that is "unique to Russia: the rich salmon and
intense blues, ochre, grays, greens and pinks," which she said she prefers to the soft
pastels of her native California.
By 1979, Stone was in charge of Coca-Cola promotions for the Moscow Olympics.
But then the Soviets invaded Afghanistan, Washington forced U.S. companies to
withdraw and she went back to the United States.
She spent the 1980s working almost exclusively on turbulent Latin American debt
issues for Citibank, so, in a way, Russia's 1998 default was deja vu.
It also provided a chance to discuss better management practices with people who
normally wouldn't give a ratings agency the time of day.
In late 2000, under Stone's leadership, the Moscow office launched a corporate
governance rating, now a global product aimed more at equity investors. The office
has five analysts devoted full time to the issue, and has rated 11 corporations,
including Mobile TeleSystems and Aeroflot, rated 7.4 and 5.2, respectively, on a scale
of 1 to 10.
Though she has been here since 1994, working first for a USAID-funded training
program for bankers, Stone said she continues to adapt to certain business practices.
For example, here people start work later, then burn the midnight oil. "If you organize
a breakfast in Moscow at 8 a.m., it's mainly foreigners who show up," she said.
Work is also a more social activity here, she said. "A very Russian thing to do is to
take a break during the day and sit down over a glass of tea and have a conversation,"
she noted. "I learned it is not very friendly to take a cup of coffee and disappear into
your office and close the door," a standard practice in the United States.
Some clients have yet to learn that commissioning S&P to issue a rating is not the
same as buying a specific score, though it happens less now, Stone said.
To her regret, Russian business also revolves too much around paperwork. "There is a
lot of formality here that doesn't exist in the West," she said. Bureaucracy is a bane,
especially in large companies, Stone said, and -- worth noting, coming from an
American -- she complains about the unusual importance of lawyers in every aspect of
business negotiations. "I will never get used to signing acts," she says, referring to the
redundant local form that must be signed when a contract is fulfilled.
Being a woman director is also a sensitive area in a business culture where men
regularly display condescension toward female colleagues. "People react to me first as
a foreigner, and then it's not as important whether I'm male or female. But I think it's
very difficult for Russian women," Stone said. When she first started doing business
here, however, people would take her for a secretary or a translator.
"There was always the embarrassing moment when you pushed your business card
across the table and your counterpart understood that in fact you were the senior
person," she said.
Her advice to other women is to establish a sense of presence. "It's important to be
clear about who you are, who you represent ... and what your expectations are [from]
Stone is one of the few foreigners in her office. S&P now owns a majority share in EA
Ratings, and all its services and staff have been integrated. Native Russian speakers
make up almost all of the agency's staff of 35, including all 20 analysts.
Committees that assign ratings, however, necessarily include foreign analysts who do
not specialize in the local market because investors use the results for cross-border
This is essential, because following locally generated indicators alone could prove
risky. In his experience, Russian banks do not price risk well, said Hans Jochum Horn,
Ernst & Young's managing partner for the CIS, pointing to "very small [bond]
"There is hardly any difference between quality and junk papers, [and] the result may
very well be a 'mini-crisis' in the Russian banking system in a few years," Horn said.
If so, proper rating skills would prove invaluable for entities that want to survive,
though most companies in trouble would never go for a rating. S&P now serves about
100 clients, 56 of them at an international level -- mostly large corporations, banks
and regions. Stone said S&P plans to rate more "second-tier companies" within three
to five years.
Those companies might get an unusually discriminating judge. Decorators had to
repaint the walls of Stone's apartment four times until they got just the right shade of
ochre. It is the kind of precision the local markets could use if they are to avert a deja
vu of their own.