Why China’s rating agencies must shape up

Investors may be eagerly eyeing the opportunities on offer in China’s newly opened $7.3 trillion interbank bond market, but they are also wary of the risks – which are accentuated by the absence of reliable credit ratings. Moves are afoot to address the problem, but they will take time. Both foreign investors and China’s securities watchdog agree that the rating mechanism used by mainland agencies is problematic. Onshore credit ratings are overly homogeneous: they comprise just fo…