It’s time for China to allow foreign credit rating agencies into its US$13 trillion bond market, say experts
- The world’s third largest bond market is gradually opening up to foreign players as it starts to join global bond benchmarks
International rating agencies must be allowed to operate in China if foreign money is to flow freely into its bond market, said industry experts.
China’s US$13 trillion bond market, the world’s third largest, is gradually opening up to foreign players as it starts to join global bond benchmarks.
The next key step must be for all global rating agencies to be granted access to the Chinese market, so overseas investors can understand and compare the ratings with those at home, said Nick Gendron, head of fixed income indices at Bloomberg. He was speaking in a panel discussion at a fixed income and currencies conference held by Hong Kong Exchanges and Clearing this week.
On Monday Chinese bonds made their debut in the Bloomberg Barclays Global Aggregate Index in what Gendron described as a “truly historic event”. The index will add Chinese government debt and policy bank bonds over the next 20 months, giving them an eventual weighting of 6 per cent and bringing an additional US$150 billion into China’s bond market, by HSBC estimates.
Two competing indices are likely to follow suit: the FTSE Russell’s World Government Bond Index and the JP Morgan Emerging Markets Government Bond Index Global Diversified.
