Chinese rating agency Dagong announced it is tying up with US-based Egan-Jones Ratings Co. (EJR) and Russia’s RusRating JSC to start a new rating agency. The new company called Universal Credit Rating Group will engage in producing responsible and reliable ratings. Egan-Jones Ratings Co. (EJR) was considered as a “nationally recognised statistical rating organisation” by the US Securities and Exchange Commission at the end of 2007. Similarly, RusRating, which is based in Moscow, focuses on ratings for the banking sector.
Guan Jianzhong, Dagong chairman, said the new agency is fully independent and stood by his views on his rivals, whose ratings are crucial in determining the borrowing interest rates for companies and countries. “The current international credit rating system has proven inadequate to the task of producing responsible and reliable ratings,” he said while adding that a new institution is needed to “mitigate economic risk in the development of human civilisation”.
Universal Credit Rating Group will provide impartial rating information and will not reflect the views of the three partners.
In 2008, US-based agencies such as Fitch, Standard & Poor and Moody were widely criticised for not warning about the impending global financial crisis. Most of the debt instruments that were linked to the crisis were given high ratings by these agencies.