CHINESE credit rating company Dagong launched a new venture with Russian and US partners yesterday to challenge the dominance of the major rating agencies that were blamed for contributing to the global financial crisis.

Officials said the Universal Credit Rating Group is aimed at "providing some balance" to the industry, traditionally cornered by Moody's, Standard & Poor's and Fitch.

The Big Three established agencies came under fire for giving high ratings to complex pools of mortgages and other debt. The US government is suing S&P for US$5 billion for misleading investors over the quality of mortgage-backed investments in the run-up to the crisis that erupted in late 2008.

"Credit ratings are indispensable in global economic operation, and it is obvious that the current rating system needs reforming and introducing new thinking," said Universal Chairman Guan Jianzhong.

As head of Dagong Global Credit Rating Co, Guan has previously criticized his Western rivals' for treating US and European governments too favorably. Privately-owned Dagong was a little-known outfit until it issued its first government debt rating in 2010, declaring the US a worse risk than China.

Dagong, RusRating and US-based Egan-Jones Ratings will have an equal share of the Hong Kong-based venture, which will have an initial investment of US$9 million.

Guan and other Universal executives said they hoped to attract other local rating agencies to join their venture. They plan to develop a "dual-rating" system in which Universal and the local agency would each issue their own rating so investors can "see there is a difference of view and then the investors can make their own mind up," said Universal CEO Richard Hainsworth, who is also president of RusRating.

Universal "is going to provide a desperately needed check on some major assumptions that are provided by the ratings that currently exist in the marketplace," said Sean Egan, a Universal director and president of Egan-Jones.

Ratings agencies play a key role in finance but they got little public attention until the global financial crisis, when Moody's, S&P and Fitch came under fire for giving overly optimistic ratings to complex mortgage-backed investments, giving even risk-adverse investors the confidence to buy them.

When the value of the investments turned out to be worth less than thought, the agencies downgraded their ratings, spreading panic among investors and leading the US government to conclude the crisis couldn't have happened without the rating agencies.