Yongcheng Coal default gets ratings agency a three-month ban
China’s bond market regulator slapped a three-month business ban on one of the country’s top credit rating companies, citing its role in the surprise Yongcheng Coal default that rattled China’s bond market last month.
China Chengxin International Credit Rating Co. Ltd. was banned from rating new interbank bonds for three months over misconduct in rating services for state-owned Yongcheng Coal and Electricity Holding Group Co. Ltd. and its parent Henan Energy and Chemical Industry Group Co. Ltd. The National Association of Financial Market Institutional Investors (NAFMII), the interbank bond market’s self-regulatory body, disclosed the penalties Tuesday in a statement (link in Chinese).
Yongcheng Coal, to which China Chengxin gave its highest AAA rating, abruptly defaulted on a 1 billion yuan ($153 million) ultra-short-term bond, setting off a chain reaction that spread to other coal mining companies and local government financing vehicles in other provinces.
Source: Caixin Global
