S&P Global Gets China's Approval for Local Rating Business

The transcript discusses the PBOC's initiative to open China's market to global rating agencies, aiming to improve local rating quality and foster competition. It highlights the challenges in achieving immediate impact due to low fees and the need for credit differentiation in the domestic bond market. The discussion also covers the different rating scales used by SMP, Moody's, and Fitch, and the importance of defaults for market learning and discipline.

What was the primary goal of the PBOC in opening the market to global rating agencies?

• To increase local market fees

• To reduce the number of global rating agencies

• To foster competition and improve local rating quality

• To eliminate the need for credit ratings

What is a major problem in the domestic bond market according to the transcript?

• High interest rates

• Too many international investors

• Lack of differentiation in credit ratings

• Excessive liquidity

How do international rating agencies plan to address the issue of credit differentiation in China?

• By setting higher fees for local ratings

• By introducing more defaults

• By using a unified global rating scale

• By providing more detailed credit information

What is a key difference between SMP and other agencies like Moody's and Fitch in rating Chinese bonds?

• SMP uses a local rating scale, while others use an international scale

• SMP focuses only on international bonds

• SMP charges higher fees

• SMP does not rate Chinese bonds

Why is the occurrence of defaults important in the Chinese market?

• To eliminate the need for credit ratings

• To reduce the number of bonds

• To provide a learning experience for market discipline

• To increase investor confidence