The Impact Of Credit Debt Default On The Rating Behavior And Creditability Of The "Issuer Pays" Rating Agency

Direct financing has gradually become the main financing method for enterprises.The bond market is developing rapidly.As of December 31,2019,the total stock of China's bond market was 97.1 trillion yuan,and Credit rating agencies is also emerging.But at present,there are still many problems in China's bond market.Bond default events have occurred frequently.Since the default of the "11-surplus Japanese debt" in 2014,as of 2019,there were 540 default bonds during the six-year period,of which AA and above bonds accounted for more than 90%.However,the source of income of most CRA in China is from issuer.To catering to bond issueres,CRA prefer to loosen their credit rating attitude even bonds assessed by certain CRAs defaulted.But investors therefore reduce their trust in in these CRAs,the inerest spread will increase after these institutions are involved in default events.It also means that the function of CRA of reducing in financing costs of bond issers would be lower.Therefore,we should cultivate the reputation system of China's bond market and Rating industry,strengthen relevant supervision and internal control,and give full play to the role of the rating industry in the bond market.