Expert calls for BRICS credit rating system

BRICS countries need to build a regional credit rating system that better fits their characteristics to effectively reflect corporate credit and reduce corporate financing costs in the region, an expert with a Chinese credit rating agency said.

The BRICS countries, namely Brazil, Russia, India, China and South Africa, have an increasingly important influence on global economic vitality. They should establish a fairer mechanism of credit risk identification and pricing in the regional and international bond markets, said Huo Zhihui, director of the technical methodologies department of China Bond Rating Co at the BRICS Credit Rating Cooperation Workshop in Beijing on Thursday.

Under the current international rating system led by Western rating agencies, the relatively low sovereign ratings of emerging economies have affected the ratings of corporate bond issuers from the BRICS countries. As a result, their credit is not reflected objectively, and they have seen an increase in their financing costs. That is why it is necessary to promote fairer, shared and jointly built market rules, he said.

BRICS countries should establish a regional credit environment evaluation system widely recognized by their rating agencies based on multiple factors, including their levels of economic development, financial market environment, national governance capacity and bond default rates. Mutual recognition of rating results should be achieved later among the countries based on the evaluation system, he said.