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China's Downgrade-Free Defaults Put Focus on Rating Firms

  • Debt raters operating in new environment, without guidelines
  • China opened door for foreign rating companies last year
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China’s record-pacing defaults this year have exposed more than just which borrowers took on too much debt. It’s also putting a spotlight on the nation’s sluggish credit raters.

Any investor relying on domestic Chinese rating firms would have been ill served with Wintime Energy Co., which had not a single rating downgrade before it this month descended into China’s biggest default of 2018. It’s one of several examples where debt raters have failed to telegraph deteriorating credit quality this year.