(Bloomberg) -- S&P Global Ratings is the first foreign credit-rating company to rate domestic Chinese bonds after awarding its top score to a unit of the country’s largest bank.

S&P assigned a AAA rating on July 11 to ICBC Financial Leasing Co., a unit of Industrial & Commercial Bank of China Ltd. That is the highest grade on the ratings scale S&P established for China. It doesn’t correspond to the same rating on its global scale.

The move puts S&P in front of the other two major ratings agencies, Moody’s Investors Service and Fitch Ratings, in trying to capture business in China’s onshore bond market. S&P hired about 30 analysts for its Beijing office, Simon Jin, Greater China president of S&P Global Ratings, said in January. It competes with about a half-dozen major local ratings companies.

In January, S&P became the first company wholly owned by an international credit rating firm to get approval to rate risk in China’s domestic debt market. China opened its doors to overseas ratings companies in 2017 to run wholly owned units, in a bid to speed up reform and foster competition in the domestic bond market.

“The competition in the domestic credit rating sector will become fiercer,” said Lv Pin, an analyst at Citic Securities Co. “Chinese regulators will keep encouraging foreign participants to come to the onshore bond market, and other global rating firms are expected to accelerate their business in China as well.”

Credit scores granted by domestic rating firms are often seen as inflated and global investors have been asking for higher quality rating assessment onshore. Dagong Global Credit Rating Co., a domestic rater, was banned last year from assessing bonds after the firm offered consulting services to borrowers with high fees.

About 97% of 1,741 non-financial corporate bonds had ratings of AA or above in China, according to a Nov. 6 statement from National Association of Financial Market Institutional Investors.

--With assistance from Tongjian Dong, Qingqi She and Lianting Tu.

To contact the reporter on this story: Katrina Lewis in New York at klewis128@bloomberg.net

To contact the editors responsible for this story: Nikolaj Gammeltoft at ngammeltoft@bloomberg.net, Adam Cataldo, Natalie Harrison

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