The quality concerns of rating of permanent coal default shock wave diffusion

category:Finance
 The quality concerns of rating of permanent coal default shock wave diffusion


Subject rating downgraded

On November 10, Yongmei holdings announced that due to the shortage of liquidity, 20 Yongmei scp003 failed to pay the principal and interest in full on schedule, which has constituted a substantial breach of contract, with a total amount of 1.032 billion yuan.

On the second day of Yongmei holdings breach of contract, cicci quickly lowered the main rating of Yongmei holdings and its controlling shareholder, Yuneng chemical group, from AAA to BB, and put it on the downgrade watch list.

It is a routine operation to reduce the credit rating of the subject after default. For example, after Ziguang groups credit risk exposure, cicci lowered the credit rating of Ziguang group from AAA to AA on November 12, and continued to be included in the observation list of possible downgrade; the debt credit rating of 18 purple light 04, 19 purple light 01 and 19 purple light 02 was reduced from AAA to AA, and continued to be listed as possible Demoted watch list.

On November 17, cicci further lowered the credit rating of Ziguang group from AA to BBB, and the debt credit rating of 18 Ziguang 04, 19 Ziguang 01 and 19 Ziguang 02 from AA to BBB, and continued to be included in the observation list of possible downgrades.

Although the status of rating agencies is detached in theory, it actually belongs to the weak side in the market, a person from a rating agency told the securities times. It is often only a little bit of personnel to lower the rating of enterprise entities and bonds after default, which is quite limited to help investors recover losses.

The source further said that credit rating plays a more preventive role in advance, but the current charging method of domestic rating agencies makes rating agencies naturally vulnerable in front of enterprises.

Under the background of single charging mode, some institutions are desperate. For example, in 2018, Dagong international was suspended from rating business for one year because of the charging mode of bundled services.

As the main rating and debt rating of 20 Yongmei scp003 before the default were AAA, the market also worried about the rating reliability of high-grade bonds, and the default event may further weaken the markets trust in external rating agencies.

In recent years, rigid cashing in the domestic bond market has been broken, and the credit risk in the bond market has been exposed. Recently, some AAA level local state-owned enterprise issuers have suffered credit risk, which further guides investors investment in credit bonds back to credit risk itself, rather than based on specific beliefs. Yu Chunjiang, director of Dongfang Jincheng Technical Committee, told the securities times.

Yu Chunjiang said that in this context, on the one hand, investors pay more attention to the construction of their own credit risk identification, early warning and pricing capacity, so as to achieve the balance between risk and income. On the other hand, they also put forward higher requirements for the external credit rating in terms of grade differentiation, early warning ability and information content.

A person from an institution in Shanghai told a securities companys Chinese reporter that after the default, the institution systematically sorted out the position of the bonds. In the past, some high-grade bonds were also transferred out of their positions, especially the bonds of AA + and below were mostly sold.

At the same time, the institution also continued to strengthen the construction of internal credit research team in order to minimize the dependence on external rating.

Some large investment institutions have large-scale credit research teams before. An asset management company interviewed by the reporter previously introduced that it has established a sound rating system internally. Through internal research, it improves the warehousing standard of bond targets, and its internal rating is subdivided into 10 grades.

We are now more concerned about internal rating. If the internal rating is negative, no matter how high the external rating is, we will not consider it. Said the Shanghai institution.

After the occurrence of credit default, many rating agencies themselves have strengthened the risk control requirements. The aforementioned rating agencies told reporters that their rating agencies have sorted out the projects in hand with similar risks, and also require the front-line personnel to communicate with the issuers to minimize the rating risk.

For the company, our rating is based on the corresponding rating methods and models. In addition to the regular re inspection of the methods and models, we will not make random adjustments due to occasional credit events. However, we will be more cautious in the analysis and judgment concerning some specific issues. Li Huijie, R & D director of China Securities PENGYUAN credit evaluation Co., Ltd., said.

Rebuilding trust mechanism

In recent years, with the opening policy, foreign rating agencies have the opportunity to further expand their territory in the domestic market. Therefore, the cultivation of excellent local rating force has been a common topic from supervision to the front line. This time, the market heard disappointment again.

There have always been concerns about ratings, but this time even the belief of high ratings has been broken, the aforementioned agency told the securities times. The belief is not only the reason for rating agencies, but the issuers may have to take more responsibilities in it. To build market confidence, it needs the efforts of all parties focusing on issuers.

Yu Chunjiang said that as the regulatory authorities gradually promote the cancellation of the mandatory rating requirements in the issuance process, the external credit rating will gradually switch to be driven by the credit risk demand of investors. External credit rating agencies should improve their ability to respond to the new needs of investors and reshape the trust mechanism with investors.

To be specific, Yu Chunjiang believes that it is necessary to improve the level of domestic rating market and strengthen the construction of rating companies: first, to strengthen corporate governance, internal control and information disclosure of credit rating agencies, and rebuild the foundation of trust; second, to strengthen the construction of rating technology system and enhance technical strength based on the demand of investors for credit risk management; third, improve the service ability of investors To enrich the service forms and improve the rating format.

To promote the development of Chinas bond market and rating industry, this involves many aspects, including improving relevant laws, improving infrastructure, training investors with different risk preferences, reducing administrative intervention, and gradually breaking rigid cashing, etc., not only to promote the development of rating agencies.

Li Huijie said: first of all, we need to improve market disclosure and strengthen information supervision, including information tracking, information filing and information disclosure, so as to help investors identify risks; secondly, we should unify law enforcement standards, strengthen the crackdown and punishment of fraudulent issuance, intentional concealment, malicious evasion and cancellation of debts, and improve the protection of investors rights and interests, At the same time, we should enrich the level of investors and cultivate more risk preference investors. In addition, we should reduce administrative intervention and gradually break down the rigid exchange, thus forming a multi-level bond market. From the perspective of the development of rating agencies, their risk assessment and disclosure need to be based on certain default data. This requires the bond market to gradually break the rigid exchange and provide sufficient samples of default data, so that rating agencies can gradually establish a risk assessment system with default and recovery rate as the core, so as to improve and enhance their own rating technology level. Li Huijie said. Source: Securities Times editor in charge: Yang Qian_ NF4425

Li Huijie said: first of all, we need to improve market disclosure and strengthen information supervision, including information tracking, information filing and information disclosure, so as to help investors identify risks; secondly, we should unify law enforcement standards, strengthen the crackdown and punishment of fraudulent issuance, intentional concealment, malicious evasion and cancellation of debts, and improve the protection of investors rights and interests, At the same time, we should enrich the level of investors and cultivate more risk preference investors. In addition, we should reduce administrative intervention and gradually break down the rigid exchange, thus forming a multi-level bond market.

From the perspective of the development of rating agencies, their risk assessment and disclosure need to be based on certain default data. This requires the bond market to gradually break the rigid exchange and provide sufficient samples of default data, so that rating agencies can gradually establish a risk assessment system with default and recovery rate as the core, so as to improve and enhance their own rating technology level. Li Huijie said.