- Government debt. With monetary policy limited by the risk of fuelling renewed capital outflows, the burden of supporting growth will fall largely on fiscal policy, with spending by government and government-related entities – including policy banks and state-owned enterprises (SOEs) – rising. The importance the authorities ...
For the first time since 1989, Moody’s Investors Service has downgraded China’s long-term local currency and foreign currency issuer ratings to “A1” from “Aa3”, on expectations that the republic’s financial strength will erode somewhat over the coming years due to rising economy-wide debt as potential slows.
China’s local currency bond and deposit ceilings, as well as the foreign currency bond ceiling, both remain at Aa3.
While the foreign currency deposit ceiling is lowered to A1 from Aa3, China’s short-term foreign currency bond and bank deposit ceilings remain Prime-1 (P-1).
In a Thursday announcement, Moody’s explains its rationale for its rating downgrade to A1:
