China's CCXI to suspend credit ratings for some amid a wave of downgrades

China's biggest credit rating agency adopted on Monday a mechanism that would allow it to pause rating services to some clients, as the number of credit downgrades in China surge after regulators tightened scrutiny over bond rating quality.

China Chengxin International Credit Rating Co (CCXI) said that under its new system it would suspend a rating if it fails to obtain necessary information from clients. During the hiatus, previous rating results would be nullified, CCXI said in a statement.

Previously, Chinese credit raters would only postpone or terminate ratings, and CCXI's new approach comes as the number of credit downgrades spiked this year.

As of June 26, there have already been 28 cases of downgrades, compared with just nine in all of 2025, according to China Securities Co.

In addition, more than 220 issuers have stopped requesting credit ratings so far this year - many voluntarily to avoid potential downgrades, according to the broker.

Downgrades have accelerated since May, after Chinese regulators held a meeting with credit rating agencies in late April to press for higher rating quality.

Investors in China's corporate bond market have long suffered from inflated bond ratings that fail to accurately communicate credit risk.

As much as 494.6 billion yuan (HK$571.13 billion) worth of corporate bonds face potential downgrades in the second half, potentially triggering sell-offs, China Securities Co said.

Suspending rating could be a way to "deal with the difficult situation" involving a potential wave of downgrades, said Zheng Lianghai, fund manager at Fuanda Fund Management Co.

CCXI said on Monday that unlike termination, rating suspension means services can be resumed once obstacles are removed. But if rating cannot be resumed in the short term - typically three months - the services should be terminated, it said.

Some companies would choose to terminate ratings as "their fundamentals weaken and debt burdens grow," Industrial Securities said in a note.

Reuters

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