Universal Credit Rating Group Launched in Hong Kong
Three independent credit rating agencies from China, the U.S. and Russia are launching the Universal Credit Rating Group this afternoon in Hong Kong. The UCRG, comprised of Dagong Global Credit Rating, Egan-Jones Ratings Co. and RusRating, aims to set up a non-sovereign global credit rating agency, that will reform the current rating system dominated by the three American-based firms, Moody’s, Fitch, and Standard and Poor’s.
The idea of UCRG was first proposed by Dagong in 2008 when the global financial crisis broke out. Many experts say the dominant ratings agencies are largely to blame for intensifying the credit crisis by providing inaccurate and excessively high ratings for problematic securities. Dagong said such a high paid, dominant model needs to be replaced with a dual-rating system that can balance rating risks.
Guan Jianzhong, Chairman of Dagong Global Credit Rating, said, "The Universal Credit Rating Group is a non-sovereign agency with wide representation. That means every country can be its investor, or shareholder. It doesn’t’ represent any national or corporational interests."
Online catalogues show there are more than 70 credit rating agencies worldwide. and the big three US-based ratings companies alone hold a collective market share of roughly 95 percent. The ratings handed out by each of the Big Three have widespread implications for investors and global markets. That’s according to US think tank "Council on Foreign Relations" research.
The Universal Credit Rating Group plans to establish new credit rating theories and methodologies by 2020. It will take five more years to provide credit risk information for world debtor economies.