S&P turns Chongqing Nan'an view to negative

S&P said it revised its outlook for Chongqing Nan'an Urban Construction & Development (Group) Co. Ltd. (CQNA) to negative from stable but affirmed the BBB- ratings on the company and its dollar-denominated senior unsecured notes.

“The outlook revision reflects the weakening budgetary performance of the Nan'an government, CQNA's controlling shareholder. The district government will face pressure from a slowdown in land-related revenue. The government's elevated infrastructure spending and tax-cut initiatives will further constrict the budgetary performance,” the agency said in a press release.

S&P noted the Nan’an government capital account revenue was down by more than 50% in 2021.

However, “The extremely high likelihood of extraordinary government support remains intact despite the weakened budgetary performance. We still believe CQNA carries important policy roles, such as urban renewal, public facilities construction and improvement, and operation of state-owned assets,” the agency said.

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