Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter
subscribe to our newsletter

Moody’s downgrades China’s credit rating

China’s credit rating has been lowered by Moody’s Investors Service amid concerns about rising debt and a slowdown in economic growth.

Moody's decision to lower China's credit rating to A1 from Aa3 reflects Moody's expectation that China's financial strength will "erode somewhat over the coming years".

Economy-wide debt in China is continuing to rise as "potential growth" slows, said the ratings agency.

Advertisement
Advertisement

The downgrade, which is the first for China since 1989, was quickly dismissed by the government's finance ministry.

"Moody’s views that China’s non-financial debt will rise rapidly and the government would continue to maintain growth via stimulus measures are exaggerating difficulties facing the Chinese economy," said the ministry in a statement.

"[Moody's] is underestimating the Chinese government’s ability to deepen supply-side structural reform and appropriately expand aggregate demand."

Commenting on the downgrade, PineBridge Investments co-head of Asia fixed income Arthur Lau said the decision was not a shock, given Moody's downgrade of China from 'neutral' to 'negative' in March.

"However, the timing of the rating reduction has taken the market by surprise, and we believe that S&P may follow suit," Mr Lau said.

"Chinese credit has opened wider and we believe that it may underperform in near-term, as the onshore tightening process has only just begun.

"For the offshore bond market, we do not think there will be many changes, partly due to the expected supply of lower credit quality sector."

[Related: Treasury 'watching the housing market closely']

Moody’s downgrades China’s credit rating
mortgagebusiness

Latest News

The chief executive of a major bank’s institutional arm has announced their retirement after more than 30 years in the sector. ...

The Reserve Bank governor is confident borrowers will manage higher mortgage repayments upon the expiry of deferral periods. ...

It would be “dangerously naive” to expect the operating environment to “go back to normal” once the COVID-19 crisis abates, APRA cha...

FROM THE WEB
podcast

LATEST PODCAST: Brokers continue to step up for clients

Do you expect COVID-19 to reduce or increase your business flows?

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.