Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA
subscribe to our newsletter
Moody’s downgrades China’s credit rating

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

A new cycle of “meaningful” growth cannot be restarted through property, the CEO of NAB has said, suggesting that business investment is...

New figures from AMP Bank have shown a “significant uptick” in the number of home loan customers switching from IO to P&I loans ahea...

Customer-owned banking institutions wrote $6.6 billion in the 2019 financial year, up 7.8 per cent from the previous year and outpacing grow...

FROM THE WEB
podcast

LATEST PODCAST: New lending launches

Do you think the mortgage market will see more consolidation this year?

Website Notifications

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