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China Proves The Best Time To Kick A Rating Agency Corpse Is Right Before It Stinks Up The Place

Courtesy of Tyler Durden

Last night we referenced an article by the WSJ which essentially confirmed that the death knell for the rating agencies is being rung. Today, China proves that the best time to kick a body (or a rating agency) is just after it has been shot in the back of the head and before it is begins stinking up the place. And in doing so, it has officially put a stake in for the role of primary global credit rater, citing China’s unique role as the world’s primary creditor. Of course, if that were to occur, the US rating may promptly be impacted just a tad more than the record 2 Years and just below record 10 Years would suggest is agreeable. As was posted previously, Dagong already issued a rating grid in which China, not at all surprisingly, came on top of both the US and UK, neither of which has any possibility of paying back the trillions and trillions of debt accumulated over the years. Now whether China would be willing to suicide itself and junk the US, is a different question.

More from Dow Jones:

Guan Jianzhong, head of China’s biggest credit rating agency, blames his Western counterparts for the global financial crisis and says China, as the world’s leading creditor nation, should have a greater say in how sovereign debt is rated, the Financial Times reports Wednesday.

Rating agencies such as Moody’s Investors Service, Standard & Poor’s and Fitch “are politicized and highly ideological and they do not adhere to objective standards,” Guan, who is chairman of Dagong Global Credit Rating, said in an interview on the U.K. newspaper’s website.

He also argued that the three big Western agencies are too close to the corporate clients they are supposed to be assessing objectively. Echoing a complaint from regulators in several Western countries, Guan singled out the practice of “rating shopping” by companies who offer their business to the agency that provides the most favorable rating.

Guan said his privately held, 16-year-old company’s methodology reflects a more objective view of a government’s fiscal strength and stability. Last week, Dagong published its own sovereign credit ranking in what it called a first for a non-Western rating agency. The results differ greatly from those issued by Moody’s, S&P and Fitch: China ranked higher than the U.S., the U.K., Japan, France and most other major economies.

One thing is certain: credit analysts are about to become in very big demand, now that idiot money, hedge funds, and virtually any asset manager will no longer be able to rely on “someone else’s rating” for their investment decision (right or, much more likely, wrong).

 


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