Chinese rating agency Dagong yesterday accused its foreign rivals of bias for failing to downgrade the United States over a deal to increase the country’s debt ceiling.
Dagong, which moved swiftly to lower the US local and foreign currency credit rating from A+ to A, with a negative outlook, has made a name for itself by hitting out at its Western competitors.
The last-minute deal to allow the US government to increase its borrowings and avoid default would “further deepen” its economic woes and does not guarantee the “safety and interest” of creditors, Dagong said in a statement.
Fitch and Moody’s took the opposite view, however, saying it would spare Washington from losing its sterling triple-A debt rating. Standard & Poor’s has not yet announced its decision.
But Dagong chairman Guan Jianzhong said they had failed to respond clearly to the US move, accusing them of making decisions that were “tied to profits.”
“Everyone can see that the other rating agencies are hesitating and have not made a clear response to the US debt ceiling increase,” he told AFP.
“I think this is normal because American rating agencies always adopt double standards and their results are tied to profits.
“This is harmful because the United States has always given other countries the impression of being a safe haven – in reality America has long had a problem repaying debt.”
Dagong has little financial muscle outside of China, but has made headlines by accusing Moody’s, Fitch and Standard & Poor’s of causing the financial crisis by not properly disclosing risk.
Guan, a paid adviser to China’s government, insists his agency is fully independent – and stands by his tough talk about his rivals, whose ratings affect interest rates at which states and companies can borrow.
China, sitting on the world’s biggest foreign exchange reserves of around $3.20 trillion as of the end of June, is the largest holder of US Treasury bonds and has expressed concerns over its investments.
Since last year, Dagong has given the United States and more than a dozen other countries lower marks than they received from the big three agencies.
In November, Dagong downgraded America’s sovereign credit rating from “AA” to “A-plus” with a negative outlook, after the Federal Reserve poured $600 billion into the economy
Founded in 1994, Dagong employs 500 people and is now looking to establish an international profile, as Beijing encourages its state-owned companies to set up shop abroad. The agency has so far offered ratings on 67 countries and regions – a first for a non-Western credit rating agency, it says – and plans to have a roster of 150 countries by 2012.