S&P ups Gansu Provincial

S&P said it upgraded Gansu Provincial Highway Aviation Tourism Investment Group Co. Ltd. and its notes to BBB+ from BBB and downgraded Chongqing Nan'an Urban Construction & Development (Group) Co. Ltd. and its notes to BBB- from BBB.

The agency said it sees stronger central management and discipline among China's local and regional governments will mean increasingly selective extraordinary support for local government financing vehicles (LGFVs).

“We raised the rating on Gansu Highway to reflect our view that the strengthening credit profile of the Gansu provincial government will more than offset the weakening of the almost certain likelihood of government support for the LGFV. We continue to believe that Gansu Highway provides an essential public service as the operator and developer of toll road assets on behalf of the Gansu government,” S&P said in a press release.

“The downgrade reflects our view of weakening government support for Chongqing Nan'an despite the stabilizing credit profile of the Nan'an district government. We lowered our assessment of government support to extremely high from almost certain, primarily driven by the more stringent regulations that aim to separate LGFVs from their government owners. We believe these regulations will weaken the company's financing function and its business ties with the government,” the agency said.

The outlook for both companies is stable.

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