Quick Take: S&P Global, Fitch to Launch Solo Credit Rating Units in China

Standard & Poor’s Global Ratings and Fitch Ratings Inc. have announced that they will launch solo units in China, following Beijing’s vow to open up the credit ratings sector to foreign companies.

“The company will be established as a greenfield operation and built organically,” said Simon Jin, head of Greater China with S&P Global, in an email reply to Caixin. “We believe this option allows us to build the model that best suits our business and clients alike, while aligning well with the policy goals of local regulators.”

Further details will be announced in due course, Jin added.

In the past, foreign companies in this sector, including leaders Fitch, Moody’s Investors Services and S&P Global, have been restricted to ranking the creditworthiness of corporate bonds issued by overseas subsidiaries of Chinese companies. In July, China’s central bank allowed foreign players to go it alone and assess the quality of bonds on the China Interbank Bond Market, where 90% of onshore debt is traded.

Fitch announced earlier that it sold its 49% stake in its Chinese joint venture to Singapore’s sovereign wealth fund in January. It also said Friday that it is planning to apply for a license from Chinese regulators to operate independently in the country.

The National Association of Financial Market Institutional Investors, an organization under the People’s Bank of China, started taking registration applications in March.

“The changes in China’s regulatory landscape provide an opportunity for us to consider and evaluate how we can best serve the needs of local and global capital markets going forward,” the Fitch spokesperson said.

Moody’s, which owns a stake in Beijing-based China Chengxin International Credit Rating Co., is analyzing its options, its spokesperson said.

Contact reporter Leng Cheng (chengleng@caixin.com)