In today’s short post, the developing problems with Huarong – a state-backed asset manager that is one of China’s largest offshore issuers – are revealing some engrained issues within the credit rating industry that may provide insight into the future of the Big Three’s relationship with China as it continues to open its doors to the international rating agencies.   The company has missed a number of financial disclosure deadlines and, according to the Financial Times, is in the middle of a massive sell-off , which started a few weeks ago. However, it is only over the past few days that the rating agencies have begun to take action, which is leading some to declare that there are similarities between this and the agencies’ actions regarding the collapse of Lehman Brothers . Whilst some negative credit watches have been established, it is Fitch who have broken rank and downgraded the company, from A to BBB. The company itself is in disarray, with it declaring that it will miss a...

In today’s brief post, the concept of a country or a region developing its own credit rating agency again raises its head, this time in relation to the Eurasian Economic Commission and the countries that it relates to. We have seen on multiple occasions the calls for regionalised credit rating agencies to be developed, often to no avail.   The Eurasian Economic Commission, created by Treaty between Belarus, Russia, and Kazakhstan in 2014, exists very much in the same process as the European Union, complete with its own court system (located in Minsk) and a range of policy objectives across the Member States. However, the reading of the latest announcement from the Minister for Integration and Macroeconomics – Sergei Glazyev – reveals the centrality of Russia and its interests. He states that ‘ I believe that the creation of a rating agency in the EAEU is a very important issue. As long as we use the ratings of America’s Big Three credit rating agencies, we will automatically f...

On March 11 th , the Investor Advisory Committee within the SEC discussed the issue of reporting problems within the SEC’s reporting framework for credit rating agencies. The discussion – found here in the SEC’s webcast archive – was based on the analysis of the Market Structure Subcommittee (list of sub-committee members found here ) and the proposal regarding how the SEC should mandate the annual reporting of credit rating agencies and how they are assessed by the Commission.   Essentially, the issue relates to the annual report that the SEC must develop as part of wider regulations. This report must detail any rule infractions that SEC Examiners found, alongside a number of other elements (like the market share and concentration within the industry etc.) This process is replicated in the E.U. via ESMA, and in the U.S. this is conducted through the post-Dodd Frank developed ‘Office for Credit Ratings’ (OCR). The sub-Committee’s Chair, J.W. Verret, explained in the webcast (s...