A Chinese company gave its own government a higher debt rating than the U.S., U.K. and Japan in the nation’s first sovereign ranking because of widening deficits in the developed world.
Dagong Global Credit Rating Co. rated U.S. government debt AA with a negative outlook, and China AA+ with a stable outlook, the company said in a report covering 50 nations published on its website. The yuan-denominated rating is higher than Japan’s AA- and the same as Germany’s, Beijing-based Dagong said.
“It’s rational to give China a higher rating than the U.S. and Japan, because its debt level is much lower,” said Shi Lei, an analyst at Bank of China Ltd., the nation’s third-largest lender by market value. “More Chinese companies may offer sovereign ratings, but it’s hard for them to get accepted by foreign investors.”
Dagong’s rating report gave “markedly” different valuations to 27 countries compared with those of Moody’s Investors Service, Standard & Poor’s and Fitch Ratings, the statement said. The euro has slumped 12 percent this year on concern that Europe’s fiscal crisis may expand beyond Greece and Spain to Germany and France.
“This marks a new beginning for reforming the irrational international rating system,” Chairman Guan Jianzhong said in a statement. “The essential reason for the global financial crisis and the Greek crisis is that the current international rating system cannot truly reflect repayment ability.”
Moody’s gives China a local-currency debt rating of A1, four below the U.S. rating of Aaa.
Dagong leads the Chinese rating market in corporate bonds, financial bonds and structured-financing debt, according to the China Daily, which reported the ratings today.
The foreign-currency rating of China, which has $2.45 trillion of reserves, is the top-ranked AAA, the agency said. It didn’t give details of its ranking system.