In depth: Why China's ratings agencies didn't see default wave

Regulator meddling and SOE bonds in packaged investments create headaches

China Financial District Reuters 20210127

Regulators not only need to strengthen supervision over the ratings agencies' integrity and due diligence but also should consider structural flaws in the bond market, insiders say. © Reuters

ZHANG YUZHE and GUO YINGZHE, Caixin

January 27, 2021 22:45 JST

In the wake of the market-rocking bond default by state-owned miner Yongcheng Coal in November, one particularly unsettling fact stood out.

Just one month before the cash-strapped state-owned enterprise (SOE) revealed it couldn't repay the 1.03 billion yuan ($159.5 million) in principal and interest due on Nov. 10, it had received the highest AAA rating from China Chengxin International Credit Rating -- one of the country's top ratings agencies.