ISLAMABAD: Finance Minister Ishaq Dar said on Tuesday that there was a need for a new international rating agency and Hong Kong-based Universal Credit Rating Group (UCRG) is a welcome addition in this regard.

Dar said this while appreciating the interest expressed by the UCRG to extend its activities in Pakistan, and provide services to companies, bourses and evaluate financial activities.

The UCRG Chairman Guan Jianzhong, leading a four-member delegation, met with Dar to explored ways and means to extend UCRG’s operations in Pakistan.

“Pakistan would like to benefit from UCRG’s expertise and services as we have an ambitious plan to launch infrastructure, power and mega projects in the near future,” the minister said.

In this connection, he referred to the Gwadar-Kashgar corridor, coal-fuelled thermal power plant and Lahore-Karachi motorway besides the need for floating financial products for financing public sector projects.

Senator Dar stated that the rating company based in China was positive news for emerging economies in the region including Pakistan.

Mr Jianzhong who was accompanied by UCRG Chief Executive Richard Hainsworth, International Affairs Dagong, Jialin Chen, and Wei Ding, managing director international affairs, Dagong, briefed the finance minister about the functioning of UCRG.

Three independent credit rating agencies from China, the United States and Russia launched the UCRG in Hong Kong. UCRG, comprised of Dagong Global Credit Rating, Egan-Jones Ratings Company, and RusRaiting, aims to set up a non-sovereign global credit rating agency which will reform the current rating system dominated by the three American-based firms, Moody’s, Fitch, and Standards and Poor’s.

Delegation visits ISE

The UCRG delegation during its visit to the Islamabad Stock Exchange (ISE) stressed that a dual-rating system was needed in the current financial system to balance rating risks.

The role of smaller rating agencies is becoming importance to counter the errors being made by the top three rating agencies who are being blamed for the recent financial crisis, the delegates opined.

“UCRG aims at providing some balance to the industry, traditionally cornered by Moody's, Standard & Poor's and Fitch,” Mr Hainsworth said while talking to the ISE members.

“Credit ratings are indispensable in global economic operation, and it is obvious that the current rating system needs reforming and introducing new thinking,” he added

Mr Guan highlighted about his plans to introduce in Pakistan, a new Yuan-based market, providing access to Chinese investors to Pakistan market and developing a Yuan-based bonds in regional markets outside China.

He stated that that the idea of UCRG was first proposed by Dagong in 2008 when the global financial crisis broke out.

President and CEO of JCR-VIS Credit Rating Company Limited Faheem Ahmad said that Yuan-based bond market can help Pakistan to lessen its dependence on the dollar. He lauded the efforts of the UCRG for creating a good competition amongst raters.

COO ISE Ahmad Noman gave a detailed presentation on ISE and criteria for strategic investors to acquire 40 per cent shares of ISE under Demutualisation Act.

The Chinese companies were invited to consider strategic investment in ISE.

There are more than 70 credit rating agencies worldwide and the big three US-based ratings companies alone hold a collective market share of roughly 95pc. UCRG may also prove to be a good alternate for many countries for their sovereign rating.