Singapore’s GIC buys 49% Fitch stake in China Lianhe Credit Rating

Traffic travels along the Second Ring Road in Beijing, China, on Wednesday, Dec. 2, 2015. Photographer: Qilai Shen/Bloomberg

Singapore’s GIC has made a strategic investment in China Lianhe Credit Rating Co., Ltd (Lianhe Ratings) in a deal that saw credit rating agency Fitch Ratings offload its 49 per cent stake in the latter in favour of the city-state’s sovereign wealth fund, according to a media release.

Financial terms of the investment are undisclosed.

Fitch had acquired its stake in China Lianhe in April 2007. The other shareholder in the Chinese firm is United Credit Ratings, which holds a 51 per cent interest, according to the agency’s website.

Despite its exit from Lianhe Ratings, Fitch will continue to operate its international credit ratings business throughout the region, including through its offices in Beijing and Shanghai.

An account by the Wall Street Journal indicates that Fitch plans to be the first independent bond ratings firm to operate in China following the divestment of its stake in Lianhe Ratings. It is reportedly planning to apply for a licence from Chinese regulators for these independent operations, which will cater to China’s $11.7 trillion bond market.

This comes as the credit ratings agency evaluates opportunities created by China’s changing regulatory landscape. In 2017, Beijing proposed to fully open its credit rating market to foreign participation through the removal of ownership restrictions, a move that saw strong approval among global rating agencies.

Established in 2000, the Beijing-based Lianhe Ratings aims to promote the sustainable development of China’s capital market and positions itself as the “leading credit rating agency in China.”

GIC believes rating agencies will play an increasingly important role in the pricing of bonds and the identification of risks.

The agency will compete with Moody’s Investors Service, which operates in China as a 49 per cent shareholder in China Chengxin International Credit Rating Co, while S&P Global Ratings has a partnership with Shanghai Brilliance Credit Rating & Investors Service Co.

However, local firms are unconcerned about the entry of foreign players in the Chinese market, with Moody’s-backed China Chengxin International Credit Rating Co. reportedly possessing the largest market share for rating securities in China’s $9 trillion bond market.

Yan Yan, chairman of China Chengxin, had said in an interview: “We aren’t worried about the impact from the potential entrance of international rating companies. In the early days, the market may pay more attention to a more advanced methodology of international rating agencies, but after eight or 10 years, domestic firms will prove to have an edge.”

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.