Forex News
April 16, 2013 @ 6:44 am

Moody’s cuts China outlook to stable from positive

China had its sovereign bond rating of As3 has been kept steady by Moody’s but the nation’s outlook was downgraded from positive to stable.

This comes after rival ratings agency, Fitch, downgraded China’s credit rating last week from AA- to A+ due to growing government debt.

Moody’s said in a statement:

“Progress has been less than anticipated in the process of both reducing latent risks by making local government contingent liabilities more transparent and in reining in rapid credit growth; therefore, some of the upward pressure on the Aa3 rating has eased.”

“More reform would be necessary to prevent a buildup of pressures that could increase the risks of a hard landing for the Chinese economy. “

But Moody’s credited China for maintaining better fiscal metrics than Belgium or France, and pointed out that China’s large international investment position means its external assets exceed its domestic liabilities to the tune of $1.8 trillion (1.2 trillion pounds).

The news comes a day after China reported lower than expected first quarter GDP growth, raising concern of a slowdown in the world’s second largest economy.

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