Wednesday March 2 2016
News Source: Global Exchanges
Focus: Credit Rating
Type: General
Country: China
On 2nd March 2016, Moody`s Investors Service changed the outlook to negative from stable on China`s government credit ratings, while affirming the Aa3 long-term senior unsecured debt, issuer ratings, and (P)Aa3 senior unsecured shelf rating.
The key drivers of the outlook revision are:
1. The ongoing and prospective weakening of fiscal metrics, as reflected in rising government debt and in large and rising contingent liabilities on the government balance sheet.
2. A continuing fall in reserve buffers due to capital outflows, which highlight policy, currency and growth risks.
3. Uncertainty about the authorities` capacity to implement reforms — given the scale of reform challenges — to address imbalances in the economy.
At the same time, China`s fiscal and foreign exchange reserve buffers remain sizeable, giving the authorities time to implement some reforms and gradually address imbalances in the economy. This underpins the decision to affirm China`s Aa3 rating.
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