New credit rating firm to challenge big three

Chinese rating agency Dagong Global Credit Rating said Monday it has teamed up with US and Russian partners to build a new international credit rating system with the aim of challenging the current system, which is dominated by three US rating agencies.

Universal Credit Rating Group, a joint venture set up by Dagong Global with Pennsylvania-based Egan-Jones Ratings and Moscow-based RusRating JSC, will be put into operation in Hong Kong on June 25, Guan Jianzhong, chairman of Dagong Global, told a group of reporters in Beijing.

According to Guan's blueprint, Universal Credit is planning to build up a new global credit rating system within five years.

Guan said that the agency aims to be different from the current one, which has been dominated by three major US rating agencies - Moody's Investors Service, Standard & Poor's and Fitch Ratings - and provide global investors with impartial rating information within 10 years.

"Seeking profitability is not our priority at the current stage," Guan told the Global Times.

"The big three rating agencies represent US interests, and they have adopted dual standards when they conduct sovereign credit ratings for the US and European countries," Guan said.

"The big three also lack of supervision from the international society," Guan noted.

"The big three have been widely criticized for failing to warn about the global financial crisis in 2008, and their lack of independence has hindered global economic development," Ma Yao, a macroeconomic analyst at Shenzhen-based CIC Industry Research Center, told the Global Times Monday.

The US Justice Department filed a civil lawsuit against Standard & Poor's on February 5, alleging that the rating agency had ignored its own standards to rate mortgage bonds that imploded in the global financial crisis and cost investors billions.

"Rating information provided by Universal Credit can offer investors a different perspective compared to that provided by the big three and help them in decision making," Ma said.

"The more accurate the information Universal Credit can provide, the harder it will impact the status of the big three," Ma noted.

Guan noted that Universal Credit does not represent the interest of any particular country or group. To increase its influence and also ensure its independence, Universal Credit is open to private investors around the world, but they should not have any conflicts of interest with credit rating businesses.

"It is a tough task for us to challenge the status of the big three, but we can gradually emerge as an alternative for global investors," Guan said.