China presses credit graders to improve bond rating quality, sources say

SHANGHAI, April 27 (Reuters) - Chinese regulators are holding a meeting with credit rating agencies on Monday to press for higher rating quality in the country's $29 trillion bond market, according to sources.

Fifteen rating agencies gathered in Beijing to discuss issues such as inflated ratings, in a government-orchestrated effort to improve rating quality and corporate governance, one of the sources said.

Another source said several similar meetings have already been held recently and the industry will soon publish a self-regulatory proclamation as China's central bank, which supervises the interbank bond market, demands higher rating standards.

The sources declined to be named as they were not authorised to speak to the media.

The regulatory push comes as China encourages financing through equity and bond markets to reduce reliance on bank lending, increasing the role of credit rating agencies in the world's second-biggest economy.

China's faces a persistent challenge with inflated bond ratings, as cut-throat competition nudges ratings agencies to award their clients top ratings that often fail to accurately communicate credit risk to investors.

Yao Yu, founder of credit research firm RatingDog, said regulators may seek to lay the groundwork for long-term, healthy development of the credit rating industry "at a time when domestic default risks is low ... and investors are becoming less worried about credit risks."

Monday's meeting was organised by Beijing's industry body to discuss solutions to issues including inflated ratings, inadequate credit differentiation and weak risk precautions, according to one of the sources.

Participants include major credit agencies such as China Chengxin, Lianhe Ratings, Dagong, Pengyuan, Shanghai Brilliance, S&P Ratings (China) and Fitch Bohua.

The industry association could not be reached immediately for comment.

In 2025, a total of 4,080 corporate credit and financial bond issuers were rated in China, and 73% of them were rated AA+ or above, showed data from the National Association of Financial Market Institutional Investors (NAFMII).

($1 = 6.8303 Chinese yuan renminbi) (Reporting by Shanghai Newsroom Editing by Shri Navaratnam)