China’s regulators, led by the People’s Bank of China, have instructed domestic credit rating agencies to re-examine issuers with top bond ratings under updated standards. The changes include a market-based test tied to the spread between a bond’s yield at issuance and the yield on comparable government bonds.
Reports said issuers whose issuance spreads exceed 200 basis points face possible removal of AAA status, although rating firms can consider other factors before making a final decision. The review comes as authorities seek greater differentiation in the domestic ratings market, where ratings remain concentrated at the upper end.
Among more than 6,000 bond issuers at the end of the first quarter, 27% were rated AAA and 32% AA+, and more than 90% of domestic bond ratings were AA or above. Regulators met rating agencies in late April to require higher rating quality, and rating actions have increased since then.
As of June 26, 28 downgrades had been recorded in 2026, compared with 9 in all of 2025, while more than 220 issuers had stopped requesting ratings this year. Lianhe Credit Rating withdrew ratings for several AAA issuers, and China Chengxin International Credit Rating introduced a suspension mechanism for cases where required client information cannot be obtained. Regulators have also required agencies to report issuer-requested rating terminations within three working days and explain the reasons, including details on the issuer’s operations, financial condition and credit outlook.