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Sovereign credit rating rules unveiled

A Chinese ratings company on Saturday unveiled a set of sovereign credit rating standards.

The standards were announced by Dagong Global Credit Rating Co Ltd, one of the first domestic rating agencies in China.

The sovereign credit rating standards would be able to evaluate the willingness and ability of a nation's government to repay its commercial debts, the company said.

The credit rating results could also be used to reflect the relative possibility of a government to default as a debtor.

Elements of credit risks will include the country's political environment, economic power, fiscal status, foreign debt and liquidity, said Dagong.

The company said that it judges the credit of a sovereign entity on a comprehensive evaluation of its fiscal strength and foreign reserves.

Compared with other rating agencies, Dagong pays more attention to the different economic stage of each country, and examines the features of its credit risks in a systematic view.

Jiang Yong, director of the Center for Economic Security Studies under the China Institute of Contemporary International Relations, said the financial crisis exposed a risk of just relying solely on the credit rating agencies of a single country.

Luo Ping, head of the training center under the China Banking Regulatory Commission, said the launch of the standards would help improve the transparency of credit rating data, and would strengthen China's position in the international financial arena.


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