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 put in place procedures and mechanisms designed to minimize the likelihood of conflicts of interest arising.
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. It also publicly announces in a timely and continuously manner if a rating is discontinued and includes the date the rating was last updated, the fact that the rating is no longer being updated and includes full reasons for such discontinuation.
Solicited private rating refers to a request of credit opinion or credit rating report made by a person which is exclusively prepared for, and provided to, the person and that is neither intended for dissemination to the public or distribution by subscription, whether in Hong Kong or elsewhere, nor reasonably expected to be so disseminated or distributed. Private rating is only subsequently disseminated to the public, if such rating has been prepared in compliance with the provisions of The Code of Conduct for Persons Providing Credit Rating Services.
(b) Unsolicited credit rating
CCXAP carries out unsolicited rating for an entity and charges no fee on the rated entity. The rated entity does not participate in the rating process. 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, despite CCXAP has no access to the internal information of the rated entity. CCXAP usually publicizes unsolicited ratings.
Rating Dimensions
CCXAP's rating services include issuer rating 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.