China, Chinese Rating Agency Send Mixed Signals

January 5, 2011 by · Leave a Comment
Filed under: The Rating Agencies 

Beijing-based Dagong Global Credit Rating has determined that China’s creditworthiness is superior to the U.S.’s. Dagong, founded in 1994, had until recently only rated Asian corporate debt. This is their first attempt to evaluate sovereign debt.

Guan Jianzhong, chairman and president of Dagong, had harsh words about the U.S. during an interview with the Financial Times: “The U.S. is insolvent and faces bankruptcy as a pure debtor nation but the rating agencies [The Big Three] still give it high rankings.”

Many share Mr. Guan’s skepticism of the U.S.’s creditworthiness, and some in Asia have received Dagong’s ratings with enthusiasm.

U.S. Treasury Department statistics report that between 2004 and last year, China extended its holdings of U.S. securities 400% to more than $1.4 trillion.

Dagong has applied to the Securities and Exchange Commission to become a nationally recognized agency in the U.S.

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