18S&P Global (China) Ratings Enters China’s Domestic Bond Market
S&P Global (China) Ratings is authorized to rate issuers and issuances from:
- Financial institutions
- Structured finance
- Panda bonds
China’s long-term strategic plan includes developing the country’s capital markets and attracting foreign investors. To support this, the government opened its financial sector to international credit rating agencies. Previously foreign companies were only permitted to take a noncontrolling minority stake in a domestic Chinese credit rating agency.
After studying this signiﬁcant market opportunity and meeting with issuers, investors, and regulators, S&P Ratings (China) Co., Ltd., a wholly-owned, indirect subsidiary of S&P Global, applied for a license to operate as a credit rating agency. In January 2019, that application was granted and S&P Ratings (China) Co., Ltd. became the ﬁrst wholly foreign-owned credit rating agency licensed to operate domestically in China. The new rating agency operates in China under the brand name S&P Global (China) Ratings and 标普信评.
Headquartered in Beijing, S&P Global (China) Ratings will employ its own ratings’ standards, criteria, and methodology, with compliance and control standards derived from those of S&P Global Ratings. S&P Global (China) Ratings began its new operation with its first chief executive officer and more than 40 ratings employees. It is also working with S&P Global Market Intelligence to meet the needs of fixed income investors interested in China.
S&P Global (China) Ratings has adopted a national scale rating in recognition of the size and diversity of China’s domestic capital markets, applying a methodology relevant to those markets.
China’s Domestic and Offshore Bond Markets
|China’s offshore bond market: |
S&P Global Ratings currently rates offshore bonds for more than 400 companies in China, including issuances in Renminbi and other major currencies. S&P Global (China) Ratings will work with these same issuers towards rating their domestic Chinese debt.
|China’s domestic onshore bond market is one of the largest bond markets in the world. S&P Global (China) Ratings’ entry represents a significant opportunity given high demand for more transparency and greater granularity around credit risk in the Chinese market. S&P Global views this as a longer-term initiative as China’s debt market develops over the next three to five years.|
China’s bond market is one of the largest in the world
Domestic and International Debt Securities
(dollars in trillions) (as of 12/31/2018)
Foreign investors currently own 2% of China’s onshore bond market
China’s Onshore Bond Market
Total $12.5 Trillion
(percent) (as of 12/31/2018)
|Foreign bond investors||2.3%|
Domestic bond investors
Bloomberg and People’s Bank of China