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Credit ratings agencies should not amplify crisis: report

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Press Trust of India Shanghai
Last Updated : Jan 21 2013 | 1:39 AM IST

Global credit ratings agencies have a great responsibility not to amplify the ongoing European debt crisis, the official Xinhua news agency said in a commentary on Saturday.

Xinhua, which often represents the Chinese government's view, said Standard & Poor's (S&P) downgrade of nine euro zone countries, including France, was legitimate, but questioned the timing and said there were signs the crisis was alleviating.

"The Standard and Poor's (S&P) downgrade move, though containing some legitimate concerns, also raised fresh doubts over the credibility of ratings agencies," Xinhua said in a commentary.

"As the crisis is showing tentative signs of receding, the S&P's overwhelming downgrade has once again weighed on the market and dented investors' confidence" Xinhua said.

On Friday, Standard & Poor's downgraded the credit ratings of nine euro zone countries, stripping France and Austria of their coveted triple-A status but not EU paymaster Germany.

"With great power comes with great responsibility. In this connection, the ratings agencies should use their power with caution to avoid becoming an ominous amplifier of the ongoing sovereign debt crisis in Europe," Xinhua said.

Xinhua said credit agencies should be objective and professional in analyzing the market situations and that investors should reduce their reliance on the agencies and make their own judgements.

Citing the 2008 financial crisis, Xinhua said the failure of ratings agencies to assess the risky financial products that contributed to the financial crisis.

"As global investors should be warned about the major risks of the European debt mess, ratings agencies should also do their honest job and not repeat their past mistakes to win back the trust of global investors," Xinhua said.

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First Published: Jan 14 2012 | 1:57 PM IST

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