IFR Asia - October 27, 2018

Fitch launches China rating agency

Fitch has launched a domestic rating

agency in China following the opening up

OFûTHEûSECTORûTOûFOREIGNûlRMS

FITCH (CHINA) BOHUA CREDIT RATINGS will

INITIALLYûCOVERûlNANCIALûINSTITUTIONSû

INCLUDINGûBANKSûNON

BANKûlNANCIALû

institutions and insurers, as well as

STRUCTUREDûlNANCEû&ITCHûSAID

4HEû53

HEADQUARTEREDûCREDITûRATINGû

agency has appointed Danny Chen as chief

EXECUTIVEûOFlCERûFORûTHEûNEWûENTITY

A spokesperson for Fitch said that the

NEWûENTITYûWILLûHAVEûAROUNDûûSTAFFûBYûTHEû

ENDûOFûTHEûYEARû4HEûCOMPANYûWILLûINITIALLYû

be based in Beijing with the possibility of

expanding into other cities later.

Fitch previously held a 49% stake in

#HINAû,IANHEûBEFOREûSELLINGûITSûSHARESûTOû

3INGAPOREANûSOVEREIGNûWEALTHûFUNDû')#û

earlier this year, a move widely interpreted

as a sign that it was preparing to launch its

own standalone business onshore.

In July last year, the People’s Bank of

China issued formal guidelines to allow

foreign rating agencies to rate onshore

bonds as part of a wider agreement struck

with the US to improve trade ties.

Despite recent tensions between the

two countries, China has largely stuck to

the spirit of the initial pact. In March this

year, the National Association of Financial

Market Institutional Investors published

rules requiring both domestic and foreign

credit rating agencies to register with it to

rate credits in the interbank bond market.

NAFMII said it would grant two types of

licences: category A, which gives full ability

to rate all securities in the interbank bond

market, or category B, which grants limited

access, based on the regulator’s assessment.

#ATEGORYû!ûLICENCESûCOVERûlNANCIALû

BONDSûNON

lNANCIALûDEBTûINSTRUMENTSû

asset-backed securities and bonds issued by

offshore entities, NAFMII said.

4HEûSPOKESPERSONûCONlRMEDûTHATû&ITCHû

had applied for a category B licence.

In August, Moody’s and S&P published

detailed applications for rating licences

INûTHEûINTERBANKûBONDûMARKETû4HEûTWOû

strategies differed, however.

-OODYSû#HINA  û#REDITû2ATINGûSAIDû

it planned to use its parent company’s

rating methodology, rating symbols

ANDûDElNITIONSû30ûMEANWHILEûSAIDû

its standalone business in China would

apply a customised rating system and

methodology, although it said it would use

its global methodology as a reference when

conducting rating analysis.

4HEûSPOKESPERSONûSAIDû&ITCHû"OHUAû

will use a different rating methodology,

although there may be some overlap with

Fitch’s international ratings system.

Moody’s currently holds a 30%

shareholding in China Chengxin

International. S&P does not hold a stake

in a Chinese rating agency. It ended its

partnership with Shanghai Brilliance earlier

this year.

THOMAS BLOTT

)NûTHEûBROADERûMARKET ûûOUTûOFû û
LISTEDûCOMPANIESûHADûMOREûTHANûû
of their outstanding shares pledged for
LOANSûASûOFû/CTOBERûûDESPITEûANûOFlCIALû
ûCAPûONûPLEDGEDûSHARES ûANDûALLûBUTûû
listed companies had at least some shares
pledged, according to China Securities
Depository and Clearing data.
!SûOFû/CTOBERû ûTHEûSHARESûOFûû
companies had fallen below the alert
level – where the value erosion in pledged
shares would require borrowers to put
UPûMOREûCOLLATERALûnûANDûûCOMPANIESû
triggered margin calls, putting them at
risk of forced liquidation, according to
ANûESTIMATEûBYû#HINESEûBROKERAGEû4&û
Securities.
4HEûFUNDINGûSTRESSûISûRESHAPINGûCORPORATEû
share structures, with the number of
share ownership transfer deals jumping
ûDURINGûTHEûlRSTûNINEûMONTHSûTOû û
according to Huatai Securities.
4HEûDROPûINûSHAREûPRICESûhHASûGREATLYû
reduced funding options for many listed
lRMS vûSAIDû$Iû9ANG ûANALYSTûATûCREDITûRATINGû
agency China Bond Rating.
4ANû*IALONG ûDIRECTORûOFûPRIVATEûSECURITIESû
INVESTMENTûATûCONGLOMERATEû:ENDAIû'ROUP û
SAIDûTHATûWHILEûTHEû
ûMARKETûCRASHû
hit mainly highly-leveraged stock punters,
this year’s crisis could deal a bigger blow to
the real economy.
h4HEûSTOCKûMARKETûDROPûTHISûTIMEû
is affecting operations of many listed
companies, at a time when economic
PROSPECTSûAREûNOTûGOOD vû4ANûSAID
:ENDAISû4ANûSAIDûHISûGROUPûHASûNOûPLANSû
yet to answer the government’s call to
RESCUEûSTRUGGLINGûLISTEDûlRMSûPARTLYûBECAUSEû
the worsening economic environment is
disrupting existing valuation models, and
there is no guarantee that investing now
WOULDûBEûEVENTUALLYûPROlTABLE
SAMUEL SHEN, ANDREW GALBRAITH

Please contact us if you have information about job moves: [email protected]

„ The former head

of the Philippines’

PPP Centre Cosette

Canilao has joined

ABOITIZ INFRACAPITAL,

the infrastructure

investment arm

of Aboitiz Group,

as chief operating

officer.

Canilao was recently

managing director

and head of PPP

advisory at consulting

firm Atkins Acuity.

She was previously

head of the PPP

Centre for five

years, where she

was responsible

for overseeing

the country’s PPP

programme under the

previous President,

Benigno Aquino III.

She has also worked

at Standard Bank and

PwC.

„ Dutch asset

management

firm ROBECO said

last Friday it had

appointed Mitchelle

Zhou to lead its

commercial activities

in China, effective

October 29.

Zhou will initially be

based in Hong Kong

before relocating to

Shanghai next year

to oversee the firm’s

wholly foreign-owned

enterprise in China.

She will report

to Graham Elliot,

Robeco’s head of

distribution Asia.

Zhou was most

recently sales lead

for BlackRock’s China

institutional business

and has also worked

at ABN AMRO and

BNP Paribas.

In July last year, the People’s

Bank of China issued formal

guidelines to allow foreign

rating agencies to rate onshore

bonds as part of a wider

agreement struck with the US to

improve trade ties.

Please send job moves to

[email protected]