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Overview of Rating Services

Corporate Rating and Debt Rating

China Chengxin (Asia Pacific) Credit Ratings Company Limited ("CCXAP") takes a step-by-step strategy to develop its business in the international market, providing credit rating services to Chinese and international corporations and institutions by issuing conventional debts denominated in RMB, Hong Kong dollar, US dollar and structured debts.

 

Solicited Credit Rating and Unsolicited Credit Rating

There are two major types of credit rating approaches, namely solicited rating and unsolicited rating.  CCXAP adopts the two approaches to rate issuers and debt securities.  CCXAP specifies in each public rating report whether the rating is solicited or unsolicited.

 

(a) Solicited credit rating 

CCXAP adopts the issuer-pay model for its solicited rating services that CCXAP receives a fee from the rated entity according to a contract signed between CCXAP and the rated entity.  CCXAP has developed policies and mechanisms to avoid potential conflicts of interest by way of segregating the compensation received from any activities which may affect the rating process.

Solicited rating can be a public rating or a private rating requested by a rated entity or by a third party on an issuer's behalf. 

For solicited public rating, CCXAP receives the required information and data from the rated entity and proactively collects information from the public for processing the credit rating analysis.  CCXAP publicizes the rating result according to the time-line set for the rating process. 

A rated entity may request CCXAP to rate it on a private basis.  Such kind of solicited private rating is acceptable provided that an agreement of private rating is documented at the outset. 

 

(b) Unsolicited credit rating

CCXAP carries out unsolicited rating for an entity and charges no fee to the rated entity.  CCXAP performs unsolicited rating when it believes that there is sufficient public information available that meets its rating methodology, and that the unsolicited rating is of the interest of the investing public. CCXAP usually publicizes unsolicited ratings.

 

Rating Dimensions

CCXAP's rating services include issuer rating (“rated entity”) and debt issue rating. Issuer rating is a current assessment of an issuer's overall credit worthiness, its capacity and willingness to fully meet its financial obligations on time, whereas a debt issue rating is a current opinion on the credit worthiness of an obligor with respect to a specific debt issue. Credit worthiness refers to the ability of a rated entity and the debt issue to meet its contractual financial obligations on time. CCXAP adopts a set of concise, precise, consistent and comparable credit rating symbols expressed in letters to summarize the respective credit worthiness at each credit rating level. An issuer rating is assigned according to its level of default risk probability, whereas a debt issue rating is on its possible loss percentage in the event of default.

 

Ancillary Services

CCXAP also provides certain ancillary services such as credit research, industry research and market information to its clients provided that such services do not lead to potential conflicts of interest with its credit rating services.