China Makes Rating Firm Pay for Debt Defaults for First Time
- Court asks firms serving defaulter to repay some bondholders
- Ruling may prompt more investors to seek compensation: analyst
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A Chinese court ruled that a local ratings firm should help compensate some creditors for a construction firm’s 1.4 billion yuan ($216 million) bond defaults three years ago, a first in the country as Beijing raises pressure on agencies to improve their due diligence.
Dagong Global Credit Rating Co. is responsible for repaying up to 10% of at least 494 million yuan of combined debt claims to more than 400 individual bondholders of Wuyang Construction Group Co., according to a ruling by Hangzhou Intermediate People’s Court dated Thursday and seen by Bloomberg News.