adminHONG KONG. — Standard & Poor’s Ratings Services yesterday cut its outlook for the Chinese government’s credit rating, marking the second major ratings firm to take a dimmer view of China’s creditworthiness in the past month. S&P kept its double-A minus rating on China’s sovereign debt, but lowered the outlook to negative from stable.That is the same level the country’s debt is rated by fellow ratings firm Moody’s Investors Service, which also this month lowered its outlook on China’s debt to negative.
The moves also come as China opens its massive bond market wider to foreign investors.
S&P said the country’s attempts to overhaul the world’s second-largest economy toward domestic-led economic growth is proceeding “more slowly than we had expected.”
“Economic and financial risks to the Chinese government’s creditworthiness are gradually increasing,” the firm said.
It cited expectations for government and corporate debt metrics to worsen and its fears the country will rely too heavily on credit growth to jump-start a sluggish economy.
”These expected trends could weaken the Chinese economy’s resilience to shocks,” S&P said. — WSJ
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