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China Chengxin Credit Management Co., one of the country’s main credit ratings agencies, will start rating bonds in Hong Kong as more Chinese companies sell debt in the city.
China Chengxin has obtained a credit rating license from Hong Kong’s Securities and Futures Commission, said Philip Li, managing director of China Chengxin Asia-Pacific Credit Ratings Co., the company’s Hong Kong unit.
“We will try to target those corporates which have closer relationships with their parent company in China,” Li said in a telephone interview today.
Chinese companies are increasingly turning to Hong Kong to sell debt denominated in China’s currency, the yuan. Corporate issuance for the so-called Dim Sum bonds, some of which don’t have ratings, increased 11 percent to 89.4 billion yuan this year.
In August, China’s Vice Premier Li Keqiang announced a 50 billion yuan quota of Dim Sum sales by mainland-based companies when he visited the city. Baosteel Group Corp., one of China’s largest state-owned steelmakers, raised 2.9 billion yuan in February as the first issuer under the program. Electricity producer China Datang Corp. sold 1 billion yuan of three-year Dim Sum bonds on June 8, according to data compiled by Bloomberg.
Chinese ratings companies often give higher investment grades than their international counterparts. China Shanshui Cement Group Ltd. (691)’s Dim Sum bonds due July 2014 were rated BB-by Standard & Poor’s, while its onshore bonds of the same tenor were graded AA by Beijing-based Chengxin. BB- is three levels below investment grade at S&P, while AA is the third-highest ranking at Chengxin.
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