Dagong Global Credit Rating Co., the Chinese firm seeking to become an alternative to Standard & Poor’s, Moody’s Investors Service and Fitch Ratings, graded Austria’s government debt lower than that of Hong Kong.
Austria is rated AA+, Dagong’s second-highest ranking and a step below Hong Kong’s top AAA grade, the Beijing-based company said in an e-mailed statement today. Austria, Europe’s 14th-biggest economy, has the highest ratings from Moody’s, S&P and Fitch, according to data compiled by Bloomberg.
Austria’s “financial strength has noticeably decreased. The export destination structure which relies heavily on the internal market of the eurozone encumbers its economic growth,” Dagong said in the statement.
Ratings by companies such as S&P, Moody’s and Fitch came under regulatory scrutiny after subprime mortgage securities with top grades helped fuel the worst financial crisis since the Great Depression. Pressure increased in Europe after Greece’s rating was cut to junk by S&P in April, adding urgency to plans to bail out the debt-plagued nation.
The current system has “flaws,” though rating companies can also “play an important and positive role,” the International Monetary Fund said in its Global Financial Stability report on Sept. 29.
Dagong gave China’s government a higher debt rating than the U.S., U.K. and Japan in a report covering 50 nations it published in July. The Securities and Exchange Commission turned down the firm’s request to become an approved U.S. debt rating service last month, in part because it couldn’t ensure the company would comply with U.S. reporting rules, which include the ability to carry out on-site inspections.
Closely held Dagong issued nine new sovereign ratings, it said in today’s statement, taking its total to 59.
Hong Kong’s top rating is higher than the AA+ it has from S&P, its AA from Fitch and its Aa2 from Moody’s. China’s political stability and the “optimistic outlook” for its economy support the ranking, Dagong said.