The mainland rating agencies have no credibility with their money.
The former general manager of China’s credit rating agency Oriental Jincheng International Credit evaluation Co., LTD., And Cui Runhai, the former general manager of Jiangsu Branch of Oriental Jincheng were recently “double-opened”. Cui Runhai had promised a client to help upgrade the company’s credit rating and accepted a “reward” of 2 million yuan (RMB, the same as below).
According to the Hong Kong Economic Times, Kim and Choi Yun-hai, senior executives at China’s state-owned rating agencies, used their financial resources and positions to channel profits and receive large sums of money.
According to Cui, a client once asked him to help raise his rating and offered him 2 million yuan as a reward. Cui Runhai did the work of other judges. After the rating report was issued, the client also realized the remuneration.
Cui Runhai said that a secondary level can be worth so much money, than a project tens or even hundreds of times the commission of tens of thousands of yuan.
The report said the series of corruption cases at GFC revealed the nature of corruption in the credit rating sector. It is to discuss sheet to collect fees, quantity money is graded. Credit rating trading is an important form of rent-seeking in the credit rating industry, that is, to raise credit rating as a bargaining chip and to accept the preferential treatment fees of the rated enterprises. Second, the interests of collusion, “regular” crime. It is difficult to solve the corruption problem alone, which requires the staff of rating agencies, the rated companies and bond underwriters and other stakeholders to act together. Three is a wide range of people, the case of crossover.
Wen Xiaogang, a commentator, said that ratings issued by mainland rating agencies had no reference value at all and were full of money and rights transactions, and that rating agencies were just doing things with money.
Recent defaults by several Chinese state-owned enterprises have triggered volatility in the mainland bond market, as well as attention to the mainland’s rating agencies, some of which have triple-A ratings.
In October, an unwarned default on a 1 billion yuan bond issued by China’s Henan Province state-owned Yongcoal Group sent tremors through the bond market because yongcoal was rated TRIPLE-A and had just issued a 1 billion yuan bond. The bond market thinks it is deliberately evading junk bonds. After brilliance group, purple light group and so on have defaulted, heavier industry to the mainland rating agency’s question.
Mr Wen said the decision to dump Mr Kim and Mr Cui at this point was most likely an attempt by the Communist Party to appease mainland industry discontent with the rating agencies.
There are 6 mainland licensed credit rating agencies, including Dagong International, Orient Jincheng, Zhongcheng, United Credit, New Century and Pengyuan.
Credit rating is an important decision basis for credit departments to provide loans to enterprises. From the perspective of enterprises, credit rating determines financing cost, financing scale and financing channels.
Internationally accepted “four grades and ten grades”, the specific grades are: AAA, AA, A, BBB, BB, B, CCC, CC, C, D. Each level from “AA” to “CCC” can be modified with a “+” or a “-” to indicate the relative height within the main level.