In recent years, the Chinese government has highly emphasized the development of bond market, which plays an important role during the development of macro-economy and finance sector in China, especially on some crucial steps concerning national economy and the people’s livelihood, as well as reforms in banking industry and the financial innovations. However, the bond market is smaller compared with its counterparts abroad, and its structure is much simpler. To promote the development of bond market, credit rating is very important, which has been hotly discussed during and after the recent financial crisis. This paper discusses the credit rating of bond in China, particularly the short-term financing bonds (STFBs). Our results reveal that almost all credit ratings for STFBs are A-1, the highest rating, which cannot provide investors with effective information, thus being consistent with some critical voices. However, the credit ratings for issuing firms exhibit significant difference so that they are reliable benchmarks for bond investors, and credit ratings indeed reflect the risk of issuing firms in China. Our paper provides more information for foreign and domestic investors about the bond market and the credit rating in China, and gives answer to the question about efficiency of bond rating in China. We provide some evidence for the reliability of rating in China though it is still in its early stage.
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