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Credit Rating Agency Taps on the Tremendous Opportunities from Belt and Road

Having completed more than 40,000 issuer and issuance ratings and corporate governance ratings, and being backed by top tier Mainland financial institutions, Pengyuan Credit Rating is building an integrated credit management for companies who aim to go global

Being recognised by the People’s Bank of China to carry out credit rating services for enterprise bonds on a national scale since 1994 in Mainland China, Pengyuan has also become the first Chinese credit rating agency to obtain a Type 10 license from the Hong Kong Securities and Future Commission (SFC) in 2012. This allows the company to provide credit rating services such as preparing reports on the credit worthiness of companies, bonds and sovereigns and the results are being recognised in Hong Kong and the European Union.

Credit Rating Agency Taps on the Tremendous Opportunities from Belt and Road

With a shareholder change in 2016, the company decided to expand the Hong Kong office to capture the business opportunities in the city. According to Jonathan Hu, Chief Executive Officer, there are three main reasons for the expansion. “Hong Kong’s legal and financial systems are very transparent which attracts financial institutions to establish here. SFC provides clear guidelines on what you need to do and what you can do and these help us to set up smoothly in the city. Obtaining a Type 10 license from the SFC has greatly helped us to gain confidence among international investors.”

Also, Hong Kong is close to their headquarters in Shenzhen and the city is a world recognised international financial hub. Together with the launch of Bond Connect, it allows investors from Mainland China and overseas to trade in each other’s bond markets through connection between the related Mainland and Hong Kong financial infrastructure institutions. This has further increased the confidence for Mainland Chinese enterprises to go global through Hong Kong with a more flexible capital flow. “In my view, Hong Kong is the most important capital financing hub in the region,” Hu said.

The third advantage that plays a key role to the company’s future development is the Belt and Road Initiative (BRI). Early this year, the Chinese government has pledged US$124billion investment into the Silk Road Fund. Hu stated that a lot of these funds will come from debt financing which will involve a large number of bond issuance. “I can foresee a huge opportunity on providing credit opinion on the Chinese infrastructure companies who are looking to raise capital along the BRI. They will use Hong Kong as a bridge to raise capital in overseas markets as the city is rich in capital.”

There are 16 members in the Hong Kong office who are responsible for analysis, business development and operations for the company’s overseas business.

“InvestHK is extremely helpful and they have helped us to obtain the SFC license. We truly appreciate the assistance that the team has provided us all along”, Hu concluded.

Tuesday, January 16, 2018

Fast Facts

  • Headquartered in Shenzhen and Hong Kong is the first overseas office
  • Obtained a Type 10 license from SFC that allows the company to provide credit rating services

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