As China Defaults Rise, Ratings Firms Are Little Help
Global grading systems of domestic bonds won’t be much of an improvement over the opaque local scales — or much comfort to foreign investors.
Lost in translation.
Photographer: Kevin Frayer/Getty Images AsiaPac
Foreign investors are tiptoeing into China’s bond market just as defaults are climbing. That means they’ll need even more help separating the wheat from the chaff — too bad international ratings firms can’t step up.
In January, S&P Global Inc. became the first major rating company to gain independent entry into China after its Beijing-based unit won approval to start scoring local bonds. Moody’s Investors Service Ltd. and Fitch Ratings Inc., which have both opened wholly owned subsidiaries in the country, are awaiting permission to begin their businesses.