Economic Observer reporter Cai YuekunRecently, how to cultivate the international competitiveness of China's local credit rating agencies has become the focus of attention in the rating industry.
On December 12, Ying Haifeng, President of Dagong International Credit Rating*** hereinafter referred to as "Dagong International"), said at the "2023 China Credit Summit Forum and 2023 Dagong International Annual Forum" that the current "inversion" phenomenon between the international influence of local rating agencies and the scale of China's bonds is becoming increasingly prominent. The internationalization of local rating agencies has a long way to go, and they must always keep a clear head with a sense of danger and be prepared to withstand the major test of the international market.
Ying Haifeng said that recently, Moody's downgraded the outlook of China's sovereign credit rating and downgraded the ratings of many high-quality real estate companies such as Vanke, which fully shows that rating has become a tool for the game of major powers, and local rating agencies must face external pressure and challenges.
At present, China's bond market has developed into the world's second largest bond market after the United States, and in the first three quarters of 2023, China has issued a total of 52 bonds of various types8 trillion yuan. As of the end of September, the balance of various types of domestic bonds was 1539 trillion yuan.
Ying Haifeng believes that in recent years, local rating agencies have continued to actively explore and practice in international market expansion, international cooperation and exchanges, but the overall results are limited. Local rating agencies still need to further enhance their influence in the world rating community.
Ying Haifeng said that the internationalization of China's rating agencies has a long way to go. In the context of deepening the reform and opening up of China's financial market and the more complex external environment, as an important basic institutional arrangement of the bond market, credit rating plays an important role in revealing and warning credit risks, improving risk pricing, maintaining the bottom line of no systemic risks, and competing for the pricing power of the financial market, and is of greater significance in grasping the international discourse power and maintaining national financial security.
Why can't local rating agencies go out?
Ying Haifeng believes that one of the important reasons is that local rating agencies have been tested relatively little by the international capital market, and their technical capabilities have also been tested accordingly. Therefore, the internationalization of local rating agencies will be a long-term, continuous and deepening topic. In the absence of a breakthrough in a short period of time, the rating industry needs to adhere to the coordination of consolidating the foundation and cultivating the yuan, maintaining integrity and innovation, doing a good job in top-level design, implementing the new development concept, and effectively deepening the high-quality development of finance into international development. China's credit rating system is an imported product that has not yet developed its own characteristics.
In the international mainstream capital market, the three major rating agencies of Standard & Poor's, Moody's and Fitch have long controlled the voice of the international rating system, with an overall market share of more than 90%, and are in a monopoly position in the global rating industry.
Talking about the current pain points of the internationalization of local credit rating agencies, Ying Haifeng said that the international development of Chinese rating agencies should be brave and forge ahead. At a time when China's bond market is opening up to the outside world and developing in depth, it is particularly difficult for local credit rating agencies to take any step forward in internationalization under the conditions of their own low market share, low international rating recognition, and small scope of rating business.
Ying Haifeng said that on the basis of serving the domestic financial market, it is difficult for local rating agencies to gain a foothold in the overseas mainstream financial market. First, taking advantage of the credit rating cooperation between BRICS countries is a breakthrough in the international development of China's rating industry, actively expanding the markets of late-mover countries such as "Belt and Road" countries, ASEAN countries and developing countries, and making good use of our panda bond market, which is a direction for the internationalization of local rating agencies. Second, it is necessary to tell China's story well, escort Chinese enterprises to "go overseas", promote outstanding enterprises to the international capital market, use international rating language to help international investors view undervalued state-owned enterprises more objectively and reasonably, improve the credit level of Chinese enterprises in overseas capital markets, and continue to reduce the financing costs of Chinese enterprises in the international market.