The opening of the Panda bond market to a wider range of foreign issuers is highlighting longstanding disparities between Chinese and international credit ratings and putting renewed pressure on local agencies to narrow the gap. HSBC, Bank of China (Hong Kong) and Standard Chartered Bank (Hong Kong), the first three overseas lenders to issue renminbi-denominated bonds, or Panda bonds, in the past few weeks all received AAA ratings from domestic agencies, despite variations of up to two notches in their international ratings. Chinese agencies have long been perceived to inflate ratings to please clients, and Triple A ratings are common. However, even domestic players have criticised the recent ratings, rekindling the debate over their usefulness as a guide to credit quality.
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