Moody’s trims China Chengtong

Moody's Investors Service said it downgraded China Chengtong Hong Kong Co. Ltd.’s (Ccthk) local-currency and foreign-currency long-term issuer ratings of to Baa2 from Baa1. The agency also lowered the backed local-currency senior unsecured debt rating of Ccthk 2021 Ltd. to Baa2 from Baa1. China Chengtong guarantees the bonds that are supported by a keepwell deed from China Chengtong Holdings Group Ltd. (CCT Group), the parent of Ccthk.

The outlook for Ccthk and its financing unit is now negative. Previously, the ratings were under review for downgrade. These actions conclude the review for downgrade that started on Dec. 7.

“The downgrade of Ccthk's ratings is driven by Moody's assessment that the government of China's (A1 negative) support for state-owned enterprises (SOEs) that have material exposure to commercial businesses is lower than in the past. This has led to the agency's assessment of lower government support for Ccthk as a subsidiary of CCT Group. Moody's has thus changed the support uplift for Ccthk to four notches from five while maintaining its assumptions of very high indirect government support and affiliate support for Ccthk via CCT Group,” the agency said in a press release.

Slowing economic growth could exert pressure on CCT Group’s credit profile over the next 12-18 months, Moody’s said.

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