Insights

The Central Financial Work Conference emphasized that "we should strive to President Zeng pointed out that in recent years, China's credit rating agencies have achieved remarkable results in going global, actively exploring international exchanges and cooperation, innovatively developing diversified investor services and sustainable financial businesses, and their international influence is increasing day by day. In the context of an increasingly complex external environment, credit ratings help maintain the stability of my country's sovereign ratings and are of great significance to ensuring my country's continued high-level opening up to the outside world. In order to better support high-quality development and serve the goal of high-level financial opening up, in the next step, China's credit rating industry should embark on the development path of the credit rating industry with Chinese characteristics, with the goal of assisting the construction of a financial power, focusing on serving the real economy and preventing Financial risks, continuously improve the quality and competitiveness of credit ratings, strengthen the construction of rating method systems, improve corporate governance and internal control mechanisms, and support the high-quality development of China's financial market with high-quality development of the industry.   In recent years, with the strong support of the People's Bank of China and other regulatory authorities, China Chengxin International, as China's leading credit rating agency, has actively seized the development opportunities of the country's opening up and the internationalization of ratings, vigorously explored the layout of the international market, and helped serve the new pattern of two-way opening. Since 2012, China Chengxin International has taken the lead in establishing CCXAP in Hong Kong to engage in overseas bond rating business, publish a global sequence of sovereign ratings, and actively apply for rating qualification recognition from Hong Kong and overseas market regulators; with the opening and expansion of China's capital market, it has actively expanded the rating business of panda bonds and overseas bonds. At the same time, it has carried out extensive international cooperation and exchanges , explored cooperation with BRICS countries and rating agencies along the "Belt and Road" in multiple dimensions, and innovatively carried out diversified investor services and sustainable financial business, enhancing the international influence and voice of Chinese ratings.   1. Release sovereign ratings and enhance the international voice of Chinese rating agencies   China Chengxin International released its sovereign credit rating system in 2012, and has been continuously developing and improving in the process of internationalization of the domestic capital market. So far, China Chengxin's global rating system has covered 72 countries (regions), including 50 countries and regions along the "Belt and Road". At the same time, relying on its panda bond business, China Chengxin International has successively undertaken entrusted sovereign rating business for South Korea, Poland, Turkey, Belarus and other countries. In recent years, China Chengxin International's sovereign rating actions on the credit of the United States, Greece and other countries have attracted market attention. On May 25, 2023, Fitch, a leading international rating agency, downgraded the US sovereign credit rating from AAA g to AA + g , and continued to include it in the watch list for possible downgrades (click to view) , earlier than Fitch's downgrade of the United States on August 2, and many well-known media at home and abroad reported on this extensively. On October 27, 2023, China Chengxin International raised Greece's sovereign credit rating to BB + g , with a stable rating outlook. Greek Prime Minister Mitsotakis subsequently said that this adjustment has practical significance for both China and Greece.   II. Establishing a window in Hong Kong to expand Chinese offshore debt rating and sustainable finance business   In 2012, China Chengxin (Asia Pacific) Credit Rating Co., Ltd. (hereinafter referred to as "CCXAP"), a Chinese rating agency, was the first to obtain the tenth category license from the Hong Kong Securities Regulatory Commission, and was the first Chinese credit rating agency to obtain overseas market rating business qualifications. Three other Chinese rating agencies have successively obtained licenses. On March 31, 2023, CCXAP was recognized by the Hong Kong Mandatory Provident Fund Schemes Authority as the first Chinese credit rating agency approved by it (click to view) . The five rating agencies approved before were all foreign institutions. After obtaining the qualification approval of the MPF Authority , the application scenarios of CCXAP's international bond ratings will be further expanded to the MPF scheme.   List of Credit Rating Agencies Approved by the Mandatory Provident Fund Schemes Authority and Amendment Notes   With the booming development of the Chinese overseas bond market, CCX Asia Pacific has achieved rapid growth in recent years, with nearly 200 principal ratings and 39 debt ratings. As of December 31, 2023, CCX Asia Pacific has publicly rated 187 principals, ranking first among Chinese international rating agencies. It has undertaken 14 debt ratings with a total issuance amount of approximately US$1.39 billion. In addition to traditional US dollar bonds, Chinese rating agencies are actively expanding the rating business of emerging bond varieties, such as free trade zone bonds and dim sum bonds. In November 2022, Shanghai Lingang Economic Development (Group) Co., Ltd. successfully issued Reg S, 3-year and 366-day senior unsecured free trade zone green bonds denominated in RMB and euros. Among them, the RMB fundraising scale is 1 billion yuan, with a term of 3 years and a coupon rate of 2.98%; the euro fundraising scale is 50 million yuan, with a term of 366 days and a coupon rate of 3%. The above bonds have all been awarded Ag+ senior unsecured debt ratings by CCX Asia Pacific, and are the first free trade zone bonds rated by Chinese overseas rating agencies.   Since June 2023, CCXGF International, a subsidiary of China Chengxin Group, has officially entered the list of external review agencies recognized by the Hong Kong Monetary Authority's "Green and Sustainable Finance Funding Scheme", becoming the first Chinese rating agency to obtain this qualification . Since its establishment, CCXGF International has provided assessment and certification services for more than ten green and sustainable bonds and loans. On October 30, 2023, the Hong Kong Securities and Futures Commission (HK SFC) announced its support and advocacy for the development of a set of codes of conduct for environmental, social and governance (ESG) rating and data product providers that provide products and services in Hong Kong for voluntary compliance. The voluntary code of conduct will be developed by an industry-led working group, namely the Hong Kong ESG Rating and Data Product Provider Voluntary Code of Conduct Working Group. As the only subsidiary of a Chinese credit rating agency , CCXGF serves as a member of the Hong Kong ESG Rating and Data Provider Voluntary Code of Conduct Working Group .   3. Expand the panda bond market and actively seize the opportunities of opening up to the outside world   As a pilot for the opening up of China's bond market, panda bonds have witnessed the process of China's connection with the international market from friction to continuous integration, and have accumulated valuable experience for the international development of China's bond market. China Chengxin International is a pioneer and leader in the panda bond rating market. Since the panda bond market entered a period of rapid development in 2015, China Chengxin has relied on its reputation and sample advantages accumulated in the local rating market to undertake the rating of most publicly issued panda bonds in the interbank bond market and exchanges. From 2015 to 2022, the public market share has always remained above 60%, ranking first in the market. In 2023, there were a total of 90 publicly issued panda bonds in the market, of which China Chengxin International undertook 49, with a comprehensive market share of 54%. At the same time, China Chengxin International's panda bond clients cover diversified industries and regions, and also undertook most of the first panda bonds and many innovative panda bond varieties, including the first non-financial enterprise panda bond, the first sovereign state panda bond, and the first multilateral agency green panda bond.     4. Carry out international exchanges and cooperation in multiple dimensions to expand the international influence of Chinese rating agencies   1. Innovating the BRICS rating cooperation mechanism   In recent years, Chinese rating agencies have actively carried out various forms of international exchanges and cooperation under the framework of BRICS cooperation, and explored the establishment of a BRICS credit rating alliance. China Chengxin International was invited to join the Financial Group of the BRICS Business Council in October 2022. On October 27, it was invited to participate in the "BRICS Credit Rating Cooperation Seminar" hosted by the Financial Services Working Group of the BRICS Business Council and hosted by the Industrial and Commercial Bank of China. On behalf of the Chinese rating industry, it made a keynote speech on innovating the BRICS credit rating cooperation model and participated in the roundtable discussion. China Chengxin International proposed that the BRICS countries should explore the establishment of a "1+1+N" credit rating cooperation mechanism in the direction of cooperation, and in terms of cooperation models, it can simultaneously promote bilateral/multilateral cooperation and the establishment of a rating alliance in parallel: on the one hand, it should give priority to promoting bilateral cooperation with rating agencies with rich rating experience and certain market influence; on the other hand, it should explore the establishment of a BRICS credit rating alliance. In the future, China Chengxin International will continue to strengthen discussions and cooperation with BRICS rating agencies on issues such as BRICS credit rating alliance cooperation and ESG finance.   (II) Strengthen exchanges with international industry organizations such as the Asian Credit Rating Association   China Chengxin International was invited to become a formal member of the Asian Credit Rating Association in 2007. On November 1, 2021, in the election of the new board of directors held by the Asian Credit Rating Association, Yan Yan, chairman of China Chengxin International, was elected as a director of the Asian Credit Rating Association. On September 8, 2022, the "China-Asia Credit Rating Industry Summit Forum-30 Years of China's Rating Industry: Ongoing Transformation and Reform" jointly organized by the Asian Credit Rating Association and China Chengxin International was successfully held through online live broadcast, inviting rating industry representatives from various Asian countries and Europe to exchange and share industry development experience and discuss the future of the Asian credit rating industry. On December 1, 2023, China Chengxin International was invited to attend the annual meeting of the Asian Credit Rating Association (ACRAA) held in Bangkok, Thailand. In the new round of election of directors of the Asian Credit Rating Association, China Chengxin International was successfully re-elected with a high vote and continued to serve as a director of the Asian Credit Rating Association for 2024-2025, while further strengthening in-depth exchanges with rating agencies in various regions in Asia.   2023 Asian Credit Rating Association (ACRAA) Annual Conference   (III) Carry out multi-level and multi-field exchanges and cooperation with Russian rating agencies   China Chengxin International has been communicating and cooperating with Russian rating agencies since 2018. In June 2018, China Chengxin International signed a memorandum of cooperation with Russian Expert RA Rating Company. The two sides carried out extensive cooperation in research cooperation, information technology sharing, joint development of products and services, and joint expansion of business along the "Belt and Road". On June 14, 2023, China Chengxin International and Expert RA signed a new strategic cooperation agreement again to jointly strengthen cooperation in the fields of green finance assessment, ESG rating and sustainable finance, and provide services for the "Belt and Road" and green projects in China, Russia and BRICS countries.   Through its strategic partnership with Expert RA, China Chengxin International continues to conduct potential customer negotiations and promote business implementation, and has provided rating services to Rusal, Gazprombank, etc. In terms of ESG and sustainable finance, in November 2023, CCXGF provided evaluation and certification services for the first green bond in 2023 that Gazprombank plans to issue in the Russian domestic market. Gazprombank became the first Russian green bond issuer to receive services from a Chinese evaluation and certification agency. In 2023, CCXGF was entrusted to provide ESG rating services to Rusal United Company, becoming the first Russian company to receive services from a Chinese ESG rating agency.   China Chengxin International and Expert RA have once again signed a new strategic cooperation agreement to jointly strengthen cooperation in the fields of green finance assessment, ESG rating and sustainable finance, and provide services for the "Belt and Road" and green projects in China, Russia and BRICS countries.   (IV) Deepening strategic cooperation with Middle Eastern and Islamic rating agencies   Since 2017, China Chengxin International has signed bilateral or multilateral strategic cooperation agreements with Islamic rating agency IIRA Rating Company and Pakistan VIS Group, and has continued to exchange and cooperate in the fields of rating technology and methods, joint credit rating, etc. In February 2023, China Chengxin International, CCXAP signed a new round of technical cooperation agreements with VIS Group and IIRA Rating Company. In December 2023, China Chengxin International and CCXAP were officially approved to become international rating agencies recognized by the Securities and Exchange Commission of Pakistan (click to view) . In January 2024, CCXGF International and VIS officially jointly launched green Islamic bond business, providing external review services for green financing for issuers in the steel industry in Pakistan, which is expected to become the first green bond business in the Pakistani market. In the future, China Chengxin will work with all parties to jointly promote high-quality issuers in Pakistan, the Middle East and the Islamic world to issue cross-border RMB or Islamic bonds in the Chinese bond market, and explore localized diversified financing solutions for Chinese companies going out of the China-Pakistan Economic Corridor, help potential issuers in related markets raise international funds, deepen the development of cross-border RMB and Islamic bond markets, and promote the internationalization of RMB.   China Chengxin International and CCXAP are approved as international rating agencies recognized by the Securities and Exchange Commission of Pakistan   (V) Carry out diversified investor services and sustainable financial business along the Belt and Road   China Chengxin International is also actively trying to "go global" to expand the markets along the Belt and Road, and to carry out diversified investor services and sustainable financial business in countries along the Belt and Road. China Chengxin International has cooperated with rating agencies in countries along the Belt and Road, such as Pakistan, Kazakhstan, and the Philippines, and released a variety of investment and financing assessment products. At the same time, CCXGF provides sustainable financial services such as green panda bonds, social responsibility panda bonds, and overseas green bonds to enterprises and institutions along the Belt and Road. In terms of investment and financing environment assessment and research, China Chengxin International has worked with rating agencies along the Belt and Road to publish the "Belt and Road" Country Risk Report for seven consecutive years, covering 60 countries along the route.     Looking into the future, China Chengxin International will actively respond to the national call, take helping to build a financial power as its goal, continuously enhance the strength of credit rating agencies and improve international competitiveness; improve the rating methodology system, continue to explore business diversification transformation, and follow the path of development of the credit rating industry with Chinese characteristics; continue to exert the influence of leading institutions to promote the construction of a global credit rating system and the construction of capital financing along the "Belt and Road", and strive to become an internationally leading credit rating and analysis service provider.