The China Securities Regulatory Commission (CSRC) yesterday promulgated the provisional measures on managing enterprise credit ratings in the securities market. The measures will enter into force on September 1, 2007, Xinhuanet reported.
Credit rating is a crucial step in issuing corporate bonds. The measures will lead China further toward a stable bond market and a multi-level capital market.
Bonds, assets-backed securities, and other structural financing securities with fixed return or debt approved by CSRC, as well as those transacted in the securities market, are supposed to receive rating classification, with the exception of treasury bonds.
Meanwhile, bond issuers, listed firms, unlisted public companies, securities companies, and securities investment fund management companies are to be rated.
According to the provisional measures, if an agency plans to apply for a securities rating license, it must first be a legal entity in China, and either of its paid-up capital and net assets must exceed 20 million yuan (US$2.6 million).
Those appraisers are also required to have a comprehensive business system, such as credit levels and distinct definitions, rating standards and procedures, rating results publishing as well as information confidentiality systems.
Additionally, the appraisal agencies' personnel or those whose relatives hold more than five percent shares of an enterprise, which is going to be rated, should be dodged during the rating period.
