(Yicai Global) May 15 -- Fitch Ratings has become the second overseas ratings agency after S&P Global to receive approval to rate China’s domestic bonds.

The People’s Bank of China accepted Fitch Bohua to work in the onshore bond market, the central bank said in a statement yesterday. The National Association of Financial Market Institutional Investors also accepted its registration to rate debt in the interbank market. S&P was given permission in January last year.

Opening up China’s credit ratings sector is an important part of broadening access to its financial sector, the PBOC said, adding that the latest move promotes the international development of both markets. It is also a step in the first phase of the China-US economic and trade agreement, the bank said.

“China is the core growth market for Fitch Ratings,” according to Li Guangcong, Fitch’s head of Asia Pacific operations. “We will continue to contribute to the development and internationalization of China's capital market.”

The world’s three big credit ratings companies -- Fitch, S&P and Moody’s -- have long been eager to enter the Chinese bond market. They each joined through cooperation with local players, with S&P teaming up with Shanghai New Century Credit Evaluation Investment Service, Fitch with China Lianhe Credit Rating, and Moody’s with Chengxin Credit Rating Group.

China pledged to let foreign ratings agencies run wholly owned units on the mainland in a trade deal penned in May 2017. The following year Fitch and S&P both set up local companies.

Bloomberg Barclays Global Composite Index and the J.P. Morgan Chase Global Emerging Markets Diversified Bond Index began to include Chinese government and financial bonds last year.

Bloomberg plans to prioritize the inclusion of Chinese corporate bonds, Steve Berkley, global head of the firm’s index business, told The Paper previously. It does not include them at present because investors are concerned about corporate bond ratings. International investors have long trusted the big three ratings agencies and trust their moves into China will speed up the inclusion of Chinese corporate bonds in Bloomberg’s global index, he added.

The People’s Bank of China will continue to help ratings agencies play a greater role in preventing and mitigating financial risk and improving the finance environment for private companies as well as micro, small and medium-sized firms, it added.

Editor: James Boynton