ForexNewsNow – The virtual monopoly of the three main credit rating agencies, Standard & Poor’s, Moody’s and Fitch, may often make people forget that plenty of other agencies exist including: the American AM-Best, the Indian CIBIL, the Canadian DBRS, the Japanese Japan Credit Rating. However, if there is one real challenger to the supremacy of the “top 3,” it’s very likely be the Chinese agency: Dagong.
Founded in 1994 and employing 500 people, this atypical agency has been garnering more and more attention in the media, in particular since its President, Guan Jianzhong, criticized Western rating agencies and denounced their irresponsible behavior in the middle of the debt crisis. According to Jianzhong, the three agencies did not fairly rate US sovereign debt.
Dagong’s ratings are much lower than those from the Western agencies. For example, Dagong was the first agency to downgrade the French debt rating to AA- instead of AAA among all the main rating agencies.
Nevertheless, Dagong’s ratings may also leave some room for criticism – the agency’s Chinese credit rating is higher than any of the main agencies’ ratings.
Its president has called for new, more accurate and efficient rating methods. According to him, there should be a new rating system based on the credit economy that takes into account the real effectiveness of the reimbursement of states rather than their ability to finance themselves through debt.
Of course, such a rating system would mainly benefit China since the second largest economy is also the largest creditor on the planet.