In the world of world credit rating agencies, there are only three popular names, The Fitch, the Moody's and the Standard & Poor's. Out of which, Fitch is European based and other two are US based firms. These rating agency rule the market of credit rating and make significant impact to the investors sentiments and views. Europe and Asia looking for alternatives to these agencies as two out of three agencies based on US.
One another name called Dagong Rating firm, China based rating agency might took a center place and join these three firms in terms of popularity very soon. Dagong was founded by the People‘s Bank of China and the Chinese government in 1994, as the country’s economic growth began to take off.
It had issued a first report on Sovereign Debt in July 2010, last week it reported a downgrade of the UK from AA- to A+- the same grade as Belgium, Chile and the US– came because of the country’s sluggish growth prospects for the next two years.
"The downgrade reflects the true status of the deteriorating debt repayment capability of the UK and the difficulty in improving its sovereign credit level in a moderately long term in the future," Dagong said.
"Considering that the uncertainty arising from (future) monetary policy adjustments of the Bank of England and the spillover effect of the European countries...are likely to further worsen the government's fiscal status, Dagong gives the negative outlook on the local and foreign currency sovereign credit rating of the UK (for the next) one to two years," it said.
Dagong has won attention for downgrading credit ratings for developed economies such as the US, while keeping China’s credit rating at AA+, three notches above the UK and US.
Western credit agencies typically rate China below these countries.
"Obviously this is not one of the main rating agencies that markets pay close attention to," said Sarah Hewin, European head of economic research at Standard Chartered.
A new centralised European ratings agency might command more attention from Western sources.
The Chinese agency has emphasized "wealth creating capacity" in its assessments, which helps tip the balance in favour of emerging economies.
It claims to not be “affected by ideology".
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