S&P Approved to Enter China’s Credit Rating Market

The People’s Bank of China has approved S&P Global Ratings to operate locally in its latest move to open up financial markets.

The PBOC (People’s Bank of China) has announced that S&P Global Ratings has received regulatory approval to enter the country’s credit rating market, making it the first foreign ratings agency to do so.

In a statement, the central bank said that the inclusion of S&P Global in the country’s credit rating sector is an important move to steadily open up the country’s financial markets.

“The introduction of global rating agencies is [aimed at] meeting the diversified asset allocation demands of international investors on yuan-denominated assets,” it said, adding that the move would also improve the rating quality of the bond industry.

The PBOC has now registered S&P Global’s Beijing-based wholly-owned subsidiary to conduct credit rating business on the mainland, and NAFMII (the National Association of Financial Market Institutional Investors) has likewise accepted its registration to conduct bond rating business in the inter-bank bond market.

The PBOC stressed that it will tighten regulations for credit assessment and strengthen market discipline mechanisms to bring the role of credit ratings in risk disclosure and pricing into full play.

> ALSO READ: China Boosts Oversight over Domestic Ratings Agencies (13 September 2018)

“This announcement reinforces our belief that we are uniquely placed to meet the substantial demand from Chinese issuers and investors for transparent, globally understood and reliable credit ratings, data and research,” said S&P Global president and CEO Douglas L Peterson in an SCMP report.

The central bank also it will continue to allow other eligible and globally acknowledged players into the domestic market, without offering detailed companies or a timetable.

Moody’s and Fitch have both launched wholly-owned subsidiaries in China dedicated to the domestic bond market.

 

 

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