Tue, Mar 12, 2019 - Page 10 News List

Moody’s seeking control of Chengxin, China’s biggest ratings firm: sources


Moody’s Corp is pursuing a deal that would give it control of China Chengxin International Credit Rating Co (中誠信國際), China’s largest ratings company, people with knowledge of the matter said.

Moody’s has reached a framework agreement to increase its holding in Chengxin from 30 percent to more than 50 percent, the people said.

The companies have approached the People’s Bank of China (PBOC) for feedback on the plan, they added.

Global rating firms are rushing to enter what is soon to be the world’s second-largest bond market after the PBOC eased requirements last year. S&P Global Ratings in January became the first foreign ratings company to get regulators’ approval for its local unit to grade Chinese domestic bonds.

Precise terms of a deal between Moody’s and Chengxin still need to be negotiated, and there is no certainty they would proceed with a transaction, one of the people said.

The move, if completed, would be the latest instance of an international financial company taking majority control of a local Chinese venture, a key part of China’s financial opening.

UBS Group AG recently took a majority stake in its onshore securities venture, while on Friday, Mastercard Inc agreed to set up a bank card clearing company with NetsUnion Clearing Corp (網聯清算), with the New York-based firm holding 51 percent of the business.

China has met most of the financial opening aims that it announced last year, PBOC Governor Yi Gang (易綱) said at a news conference on Sunday during the National People’s Congress in Beijing, citing S&P Global’s move as an example of the successful efforts.

Beijing-based Chengxin, established in 1992, was the first jointly-owned credit rating company approved by the central bank. It has since become China’s largest in terms of market share on bonds graded and ranked No. 4 in the world, according to its Web site.

Representatives for Moody’s and Chengxin declined to comment. The PBOC did not reply to queries.

The Chengxin stake held by Moody’s was in 2017 diluted to 30 percent, from 49 percent, following a restructuring.

At the time, Moody’s said its investment in the company had not been reduced and denied that the move was preparation for an independent onshore rating business.

Moody’s has registered two wholly owned entities in Beijing and Shanghai.

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