S&P cuts Hong Kong's grade on China spillover

Friday, 22. September 2017 07:38

As deleveraging in the world's second-largest economy could become "more disruptive" than anticipated, Hong Kong's long-term issuer credit rating was lowered to AA+ from AAA with a stable outlook, S&P Global Ratings said on Friday. But China's special administrative region had its short-term issuer grade affirmed at A-1+, and the transfer and convertibility assessment was held at AAA. 

"We view a weakening of credit support for China as exerting a negative impact on the ratings on Hong Kong beyond what is implied by the territory's currently strong credit metrics... Our base case expects relations between the Chinese central government and the Hong Kong SAR government will remain constructive," analysts said.

The decision reflects strong ties with the mainland, after its ratings were cut, according to the credit appraiser. Meanwhile, China said the firm's move doesn't take into account the financing structure in the country's marketplace, and highlighted domestic economic fundamentals and potentials.

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