To invest in stocks, look at the research reports of Golden Kylin analysts, authoritative, professional, timely and comprehensive, helping you tap potential themed opportunities!
Original title: The phenomenon of “inflated” rating still exists, and the default rate of 4 rating agencies is inverted
Economic Observation Network reporter Cai Yuekun June 13, 2022Bank of ChinaThe National Association of Financial Market Institutional Investors (hereinafter referred to as the “Association of Financial Market Institutional Investors”) announced the business development of 14 credit rating agencies in the bond market in the first quarter of 2022, default rates, internal construction and self-discipline management dynamics.
Judging from the above-mentioned reports, the phenomenon of “inflated” bond ratings still exists. Looking back at the one-year average cumulative default rate in 2021, it involves the inversion of the default rate of four rating agencies.
4Home Rating Agencies Default Rates Inverted
The circular shows that from the 2021 one-year average cumulative default rate disclosed by various credit rating agencies, the ratings given by most rating agencies are inversely related to the default rate of bonds, but the ratings of AA and AAA, Dagong, etc. The default rates between AA+ and AAA rated by International, AA+ and AAA rated by China Chengxin International, and AA, AA+, and AAA rated by Shanghai New Century are inverted.
From the perspective of inter-agency comparison, there are differences in the default rates of the same level rated by various rating agencies. Among them, the default rate of AAA rated by Dongfang Jincheng is 2.30%, the default rate of AA rated by Dagong International is 1.18%, and the default rate of AA rated by Lianhe Credit Rating is 1.18%. – grade default rate of 3.64%, higher than other institutions.
The rating agencies notified by the NAFMII include: Dagong International, Dongfang Jincheng, China Chengxin International, Shanghai New Century, China Securities Pengyuan, Anrong Ratings, S&P (China), Fitch Bohua, Lianhe Credit and other institutions .
While default rates inverted, bond rating commitments in the first quarter of 2022 decreased year-on-year.
The NAFMII disclosed that in the first quarter, 14 rating agencies contracted a total of 1,879 bond products, a year-on-year decrease of 23.65% and a month-on-month decrease of 26.57%. The business volume of Century, China Securities Pengyuan and Dongfang Jincheng accounted for 22.99%, 13.41%, 10.96% and 10.16% respectively, and the business volume of the rest of the rating agencies accounted for less than 5%. In addition, the rating agencies contracted a total of 602 non-financial corporate subject ratings, and 78 financial enterprises and other subject ratings, a decrease of 14% and 39.53% respectively from the previous month.
In addition, there will be no positive adjustments to bond ratings in the first quarter of 2022, and negative adjustments will increase year-on-year. A total of 36 issuers were adjusted by rating agencies, an increase of 2.86% year-on-year; accounting for 1% of the total number of surviving issuers, an increase of 0.01 percentage point year-on-year. In terms of institutions, Lianhe Credit and Dongfang Jincheng have more adjusted companies, 14 and 6 respectively. The adjusted number of Anrong Ratings and Far East Credit accounts for a higher proportion of their surviving issuers, 4.85% and 1.3 respectively. %.
In addition, in the first quarter, a total of 83 issuers changed their rating agencies, and no new rating agency assigned a higher rating than the original one.
As of March 31, 2022, a total of 939 issuers in the inter-bank market and the exchange market have obtained subject ratings issued by two or more rating agencies, accounting for 26.19% of the surviving corporate credit bond issuers; among them, 143 issuers The rating results were inconsistent, with an inconsistency rate of 15.22%, a decrease of 4.05 percentage points from the previous month. Inconsistent issuer ratings differed by 1 notch. Among them, CSI Pengyuan and Dagong International rated 40 and 39 issuers with higher ratings than other institutions, accounting for 14.81% and 11.96%; Lianhe Credit , 23 Dongfang Jincheng, and 16 Shanghai New Century, accounting for 5%-8%.
Rating agencies strengthen internal control management
In response to the “inflated” ratings and the default rate of bond ratings, the central bank and other departments have also issued notices to require rating agencies.
In August 2021, the central bank, together with the National Development and Reform Commission, the Ministry of Finance, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission, jointly issued the “Notice on Promoting the Healthy Development of the Bond Market Credit Rating Industry”, requiring credit rating agencies to build long-term ratings with default rates as the core. Quality verification mechanism, formulate an implementation plan, establish and use a rating method system that can achieve a reasonable degree of differentiation by the end of 2022, and effectively improve the rating quality.
At the same time, rating agencies are constantly strengthening internal control management.
In this briefing, the NAFMII stated that in the first quarter of 2022, rating agencies will continue to strengthen the construction of rating technology systems and strengthen internal control management. In the first quarter, rating agencies promoted the implementation of the “Notice on Promoting the Healthy Development of the Bond Market Credit Rating Industry” by five ministries including the People’s Bank of China, continued to strengthen the construction of rating technology systems and databases, and 14 rating agencies revised and disclosed rating methods, models, and scores. 28 rating technologies and business systems, such as table, project team management, and new product evaluation. China Chengxin International, Shanghai New Century, China Securities Pengyuan, Anrong Ratings, S&P (China), Fitch Bohua, Lianhe Credit and other institutions have separately disclosed their individual credit assessments and external credit ratings other than the final rating results in their rating reports. Support the promotion of sub-level, individual credit evaluation center aa-level.
Second, credit rating agencies complete annual information disclosure on schedule. 14 rating agencies have updated and disclosed registration documents or basic institutional information before April 30 in accordance with the Self-Regulatory Guidelines for Credit Rating Business of Non-Financial Enterprises’ Debt Financing Instruments and the Code of Practice for Securities Credit Rating Agencies. The annual rating results quality statistics, business development and compliance operation, and fulfilled the obligation of disclosure of institutional information on schedule.
In the next step, the Securities Industry Association and the Dealers Association said that they will continue to work together to strengthen the self-discipline management of the rating industry under the guidance of regulatory authorities; credit rating agencies should improve corporate governance and internal control mechanisms, continuously optimize the rating technology system, and carry out compliance with laws and regulations. The credit rating business will effectively improve the rating quality and investor service level.
Sina Statement: This news is reproduced from Sina’s cooperative media. Sina.com publishes this article for the purpose of conveying more information, and does not mean agreeing with its views or confirming its description. Article content is for reference only and does not constitute investment advice. Investors operate accordingly at their own risk.
Massive information, accurate interpretation, all in Sina Finance APP
Responsible editor: Feng Tiwei