Independent China Bond Ratings Appear To Be A Myth

As obvious credit events occur with little adjustment in “official” China bond ratings, will a system crash occur due to a transparency issue again?

It can be amusing watching a communist nation dive into the world of free market capitalism and make traditionally communistic mistakes. A component of free market economic systems is that information is known to all parties, which provides a trading venue legitimacy to engage in price discovery. Taking a closer look at China’s “AAA” rated bonds – of which Bloomberg says 57% look like junk – and it shows how China has a long way to go to shake some of its communistic information control and heavy handed management tendencies.