China-based ratings firm to take aim at big three
2012-10-24 17:37:53
The groups behind a new China-based ratings firm said Wednesday they planned to break dominance of the big three US agencies in assessing state and company debt, a much-criticized part of the financial system.
China's Dagong, Egan-Jones Ratings (EJR) of the United States and RusRating in Russia are to set up a joint venture within six months to be headquartered in Hong Kong, the companies said at a news conference unveiling the partnership.
The three partners are inviting "organisations from every country" to join Universal Credit Rating Group, and Dagong chairman Guan Jianzhong said dozens of companies from more than 20 countries have expressed an interest.
The new group aims to break the stranglehold of the big three agencies -- US-based Fitch, Standard & Poor's and Moody's -- in the next five years.
"I believe we can do this. Our goal is to form a new system with the synergy of everybody that will balance the existing system," Guan said.
The global financial crisis proved that the current international ratings system has flaws that "jeopardise human prosperity and development" and needs to be reformed, the firms said in a document they dubbed the "Beijing Declaration".
Fitch, S&P and Moody's -- long-established agencies that provide risk assessments to investors -- were widely criticised for having given their highest ratings to the housing debt instruments whose failure sparked the global financial crisis.
Universal Credit Rating Group will be "independent" and composed of private firms "whose responsibilities do not conflict with credit rating, and which do not represent the interest of any particular country or group", the companies said.
The big three US agencies will not be considered for membership "because there is big divergence between the principles and positions we respectively follow", said Guan.
Egan-Jones Ratings serves institutional investors and was granted status as a "nationally recognised statistical rating organisation" by the US Securities and Exchange Commission in late 2007.
RusRating, based in Moscow, focuses on ratings for the banking sector.