Dagong Global Credit Rating Co. LTD is a Chinese ratings agency that got some attention earlier this year for ratings the US a mere AA, in contrast to the AAA-rating offered by the big three.
Last week the SEC rejected Dagong’s bid to be recognised as an official National Statistical Ratings Agency.
That prompted Dagong to blast the SEC, saying it would take a legal action.
The SEC’s official line is that it can not conduct proper cross-border supervision.
A report in Xinhuanet quotes an expert saying that the SEC is probably just looking to keep the oligopoly in place, and well, the answer to that is… well, duh.
The thing is, ratings pretty much have to be a monopoly — at least under the current system — so that you don’t end up with Tom, Dick & Harry’s credit ratings agency handing out AAAs to whomever (yes, yes, we know the existing triumverate has fallen down pretty badly, and we think the system needs radical reform, beyond what Dodd-Frank has envisioned, but that’s another story).
And beyond that, it’s reasonable to believe that Dagong gave the US a AA rating (with a negative outlook) as a publicity stung (certainly the bond market isn’t too worried about US credit).