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Jayen Shah has
resigned as head of
debt capital markets
at IDFC BANK after
almost seven years in
the job.
Shah, who has
worked in DCM for
a total of 23 years,
joined IDFC from
Standard Chartered,
where he was head of
financial institution
group origination
for South Asia in
the bank’s capital
markets division.
He has also worked
at Royal Bank of
Scotland, Rabobank,
ABN AMRO and
Kotak Mahindra
Capital, a former
joint venture between
Kotak Mahindra Bank
and Goldman Sachs. Li Chao , former
head of Asia bond
syndicate at Standard
Chartered Bank
(Hong Kong), is
joining CHINA CITIC
BANK INTERNATIONAL as
head of fixed income.
He resigned from
StanChart in May
after having been
with the bank for
almost six years, and
had been promotedto managing director
this year.
He was named
head of Asia
bond syndicate
in January 2017,
having previously
run syndicate for
deals from Greater
China. He had earlier
worked at Royal
Bank of Scotland in
Singapore. DEUTSCHE BANK
has appointed Hans-
Dieter Holtzmann
chief country officer
and head of global
transaction banking
for Vietnam, effective
last Thursday.
He reports to
Deutsche’s Asia
Pacific head Werner
Steinmueller and
Kaushik Shaparia,
head of globalsubsidiary coverage,
global transaction
banking foreign
exchange and
corporate cash
management for Asia
in his new job.
Holtzmann, who
has been with
Deutsche for more
than 20 years, is a
replacement for Jens
Ruebbert, who left the
bank last December.China punishes
major ratings
agency
One of China’s biggest debt rating agencies
has been punished by the country’s
securities regulator and a supervisory group
under the central bank, in a rare rebuke
THATûUNDERSCORESû"EIJINGSûCONCERNûABOUTû
credit risks at a time of slowing economic
growth.
China’s credit ratings industry has a
reputation for providing favourable ratings
for local issuers, downplaying risks,
even as some international watchdogs
warn debt is at levels that could trigger a
lNANCIALûCRISIS
The China Securities Regulatory
Commission said last Friday it would ban
Dagong Global Credit Rating, one of the
country’s four big bond rating companies,
from taking on new securities rating
business for a year, and forbade it from
replacing senior management during that
period.
That announcement came after the
National Association of Financial Market
)NSTITUTIONALû)NVESTORS ûANûOFlCIALûINDUSTRYû
group under the arm of the central bank,
said it would suspend Dagong’s business
AROUNDûDEBT
lNANCINGûINSTRUMENTSûFORûNON
lNANCIALûlRMS ûALSOûFORûONEûYEAR
"OTHûTHEû#32#ûANDû.!&-))ûSAIDûTHATû
Dagong had provided consultation services
TOûlRMSûTHATûITûALSOûISSUEDûCREDITûRATINGSûFOR
The CSRC also criticised the company
FORûPOORûINTERNALûMANAGEMENT ûUNQUALIlEDû
management and assessment committee
members, and missing modelling data.
NAFMII said Dagong had provided false
statements and information when NAFMII
was investigating Dagong’s business
practices.
Neither the CSRC nor NAFMII said which
companies seeking ratings were involved in
the violations.
“Credit ratings agencies providing
consulting services to companies seeking
ratings seriously deviates from the principle
of independence, and is prohibited by
the relevant regulations of the interbank
market,” NAFMII said in the statement.
Dagong “violated industry norms,
business rules and basic compliance
requirements and caused serious adverse
effects on the market,” it added.
Market watchers initially downplayed
the NAFMII punishment, which they said
amounted to a slap on the wrist.
"UTûTHEû#32#ûRESTRICTIONûTARGETSû$AGONGSû
core business. An executive at a local asset
MANAGEMENTûlRMûSAIDûFREEZINGû$AGONGSû
ratings business would leave it “almost
bankrupt.”
The company could not be immediately
reached for comment.
!ûTRADERûATûANûASSETûMANAGEMENTûlRMû
in Shanghai said that he expected more
action against local ratings agencies, with
the CSRC vowing last Friday to strengthen
punishments for violations.GRADE INFLATION
Samuel Chien, managing director
OFû3HANGHAIû"OOM4RENDû)NVESTMENTû
Management, said that companies seeking
ratings often shop around among the
domestic agencies, giving their business to
the agency that grants them better ratings.
The result is a market in which issuers
with ratings of AA or higher are behind
more than 90% of outstanding credit bonds
by value. In other countries, such rankings
are reserved for only the strongest and
safest investment-grade debt.“Risk differentiation is increasingly
DIFlCULTûINû#HINA ûWHICHûCOULDûHAMPERû
INVESTORSûCONlDENCE vûSAIDû'ARYû.G ûANû
economist with Natixis in Hong Kong.
“This is not desirable as China needs the
bond market more than ever to fund the
UPCOMINGûlSCALûSTIMULUSû!NYûCREDITûEVENTû
created by underestimation of risk could
WORSENûRISKûAPPETITEûOFûINVESTORS ûANDûLEADû
TO ûAûHIGHERûYIELDûANDûFUNDINGûCOSTûFORû
both local governments and corporates,”
he said.
This year has seen a rash of corporate
bond defaults, including some by issuers
that had been awarded relatively high
RATINGSûBYûDOMESTICûlRMS
On Monday, Xinjiang Production and
Construction Corps Sixth Division State-
Owned Asset Management, which had
been awarded an AA rating by Shanghai
"RILLIANCEû#REDITû2ATINGûû)NVESTORSû3ERVICEû
Co, missed principal and interest payments
on a short-term commercial paper issue,
in a rare default by a local government
lNANCINGûVEHICLEû
While China has moved to ease credit
conditions and encourage investment in
corporate bonds to support struggling
PRIVATEûlRMSûAMIDûSIGNSûOFûSLOWINGû
economic growth, corporate issuers have
NOTûBEENûTHEûMAINûBENElCIARIESûOFûTHESEû
policies.
Dagong is one of China’s most
PROMINENTûRATINGSûlRMS ûANDûHASûACHIEVEDû
some recognition outside China for its
controversial sovereign issuer ratings.
In January, Dagong cut the sovereign
RATINGSûOFûTHEû5NITEDû3TATESûTOû""" ûFROMû
A-, equivalent to those for Peru, Colombia
and Turkmenistan, citing concerns that tax
cuts could weaken Washington’s ability to
repay debt.
ANDREW GALBRAITH