China to Better Regulate Credit Rating in Bond Market

A circular was jointly released by the People’s Bank of China, the National Development and Reform Commission, the Ministry of Finance, the China Banking and Insurance Regulatory Commission, and the China Securities Regulatory Commission, aiming to promote the development of credit rating in China’s bond market.

The circular puts forward clear requirements for credit rating agencies in terms of rating methods, corporate governance, in-house control, and information disclosure. Meanwhile, emphasis is placed on optimizing the rating ecology, and on strict supervision and management of credit rating agencies.

Credit rating agencies are asked to adopt well-established rating methods by the end of 2022 to ensure their ratings are trustworthy, according to the circular.

To promote fair competition in the credit rating industry, the circular encourages bond issuers to select two or more credit rating agencies to conduct ratings. The application scope of paid rating by investors will be further expanded, said the circular.