Moody’s turns interesting:
Moodys downgrades China to A1 from AA3
Changes outlook to stable (from negative)
- Says rating reflects expectations that China’s financial strength will erode somewhat over the coming years
- Says stable outlook reflects assessment that at the A1 rating level risks are balanced
- GDP will remain very large ; growth will remain high compared to other sovereigns, potential growth is likely to fall in coming years
- Expects that economy-wide leverage will increase further over the coming years.
- Expect indirect and contingent liabilities to increase
- Expect china’s growth potential to decline to close to 5% over the next five years
- Expect the government’s direct debt burden to rise gradually towards 40% of gdp by 2018 and closer to 45% by the end of the decade
- Stable outlook denotes broadly balanced upside and downside risks.
- China’s local currency and foreign currency senior unsecured debt ratings are downgraded to A1 from AA3
- China’s local currency bond and deposit ceilings remain at AA3.
Aussie no likie:
Let’s see what it does to China’s yield rocket later today.
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