AFIPER - press release no. 2
Beaumont, June 30th 2008,
For immediate release.
Holders of defaulted Russian bonds target rating agencies in Brussels
Two groups of defaulted bondholders, one French and one Belgian, are asking the European Parliament to put an end to conflicts of interest embedded within the credit rating agencies' rating process and to ensure that they take into account the default of the Russian Federation, which is actively avoiding settlement of its debt.
One month after its birth AFIPER, a French group of bondholders who claim Russia is in default on more than € 100 billion, is launching its first joint operation with the Belgian group SCRIPTA RUSSIAE MANENT (Russian scriptures remain) by presenting an official petition to the European Parliament with a view to obtaining the formal recognition of the Russian Federation's default by the credit rating agencies.
Bondholders refer to the joint declaration from heads of State and of government in London on January 29th 2008 which calls for "action to address potential conflicts of interest for rating agencies", and to consistent findings of France's highest administrative court the Conseil d'Etat that bondholders rights on the Russian Federation are not extinct, a fact that both Mme. LAGARDE, the French Republic's ministre de l'Economie, and Mr. SARKOZY have underlined in recent letters to bondholders.
They ask the European Parliament to ensure that the ongoing investigations into the conflicts of interest embedded within the rating process of structured products - which have been brought to light by the worldwide subprime meltdown - be extended to the rating process of defaulted sovereigns such as the Russian Federation.
According to bondholders, rules which enable a defaulted sovereign (who refuses any contact with its bona fide creditors) to emerge from the rating process with an "investment grade" rating instead of the more obviously appropriate "speculative grade" rating - in view of the overt unwillingness to pay - are in much the same need of review and amendment as those which have resulted in good quality ratings being assigned to poor quality mortgage-backed securities.
The petition is accompanied by a supplementary document in the form of a letter to some 150 MEPs and their deputies who form the Committee on economic and monetary affairs, chaired by Mrs. Pervenche Berès.
AFIPER and SCRIPTA RUSSIAE MANENT are asking all bondholders - including 316000 French citizens as per a 1999 French government census - to support this petition with their electronic vote as exposed on the AFIPER website, until November 30th 2008.
AFIPER is planning other operations in the upcoming French presidency of the European Union.
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Electronic support to the petition: see
Eric SANITAS, President,