Competition among China’s credit- rating agencies is intensifying, leading to a slide in standards reminiscent of what happened in the U.S. before the financial crisis, according to Dagong Global Credit Rating Co.
Credit ratings assigned to yuan- denominated bonds issued on behalf of local governments in China are misleading and don’t reflect risks investors face, Dagong Global Credit Rating Co.’s chairman said.
China’s bond-market regulator said a new credit-rating agency it is establishing needs to be funded by investors rather than issuers to avoid conflicts of interest that erode confidence in existing assessments.
China ’s U.S. dollar borrowing costs fell in October by the most since January as investors bet record currency reserves of $2.65 trillion will help the world’s fastest-growing economy win a higher debt rating.
China started its first credit rating company that will charge investors rather than borrowers for assessments as it seeks an alternative to the model used by Moody’s Investors Service, Standard & Poor’s and Fitch Ratings.