Hong Kong, March 02, 2016 -- Moody's Investors Service has today changed to negative from stable
the rating outlooks on 25 Chinese non-insurance financial institutions,
following Moody's decision to change to negative from stable the
outlook on the Aa3 rating of China, as announced on 2 March 2016.
For full details, please refer to the webpage: http://www.moodys.com/viewresearchdoc.aspx?docid=PR_343931
The 25 institutions include three policy banks, 12 domestic commercial
banks, three distressed asset management companies, three
financial leasing companies, three securities firms, and one
asset manager.
Ping An Bank Co., Ltd (Baa2 negative) is not among the 25
institutions because its rating outlook has been negative since 24 September
2015.
At the same time, Moody's has affirmed all the ratings of
these 26 financial institutions and all the Counterparty Risk Assessments
(CRAs) of the 13 domestic banks, including Ping An Bank Co.,
Ltd.
China Cinda Asset Management Co., Ltd.'s (A3
negative) Baseline Credit Assessment (BCA) remains on review with direction
uncertain, as it has been since 28 August 2015.
Please click on this link http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_187851
for the list of affected credit ratings. This list is an integral
part of this press release and identifies each affected issuer.
Outlooks, which provide an opinion on likely rating direction over
the medium term, are assigned only to long-term deposit,
long-term issuer and senior unsecured debt ratings.
At the same time, Moody's has changed the Macro Profile for
China to "Moderate" from "Moderate+,"
to reflect the continued rise in leverage in the Chinese economy from
an already high level. The change of the Macro Profile has led
Moody's to reassess Chinese banks' financial factors and standalone
profiles. The rated banks are not immediately affected by this
Macro Profile change, although there exists downward pressure on
their standalone profiles.
RATINGS RATIONALE
The change in the Chinese sovereign rating outlook to negative indicates
that the central government's capability to support financial institutions
on a broad basis could be weaker than we had previously assessed.
In addition, a primary driver in the change in the sovereign's
outlook is the concern that the government's balance sheet is exposed
to growing contingent liabilities to support in times of stress these
financial institutions as well as other entities such as state-owned
enterprise and regional local governments. Moody's believes
that the continuing growth in these contingent liabilities --
along with stated government reform objectives to introduce more market
discipline -- suggests that support from the government
will increasingly be prioritized, based on the relative importance
of each entity to the implementation of strategic national policy goals.
As a result, in accordance with Moody's joint default analysis
approach for banks and government-related issuers (GRIs),
we consider that the ratings of these Chinese financial institutions,
which incorporate a degree of government support and uplift, either
directly and/or indirectly through their parents, could potentially
be impacted by the potential for weaker government support in the future.
In view of the negative outlook, Moody's does not expect any upward
rating pressure on these companies.
A return of the rating outlook to stable for these rated financial institutions
could be considered if the rating outlook for China returns to stable
and we believe that support for the particular institution remains a priority
and is unlikely to change despite the ongoing reform efforts.
MACRO PROFILE CHANGE
The change in Moody's assessment of China's macro profile by one notch
to "Moderate", from "Moderate+" takes
into account the risk built up in the banking system, reflecting
mainly the persistent strong credit growth outpacing underlying economic
growth. High and growing financial leverage increases the corporate
sector's vulnerability to potential shocks and economic slowdown
and hence the banking sector's asset quality.
Moody's National Scale Credit Ratings (NSRs) are intended as relative
measures of creditworthiness among debt issues and issuers within a country,
enabling market participants to better differentiate relative risks.
NSRs differ from Moody's global scale credit ratings in that they are
not globally comparable with the full universe of Moody's rated entities,
but only with NSRs for other rated debt issues and issuers within the
same country. NSRs are designated by a ".nn" country modifier
signifying the relevant country, as in ".za" for South Africa.
For further information on Moody's approach to national scale credit ratings,
please refer to Moody's Credit rating Methodology published in June 2014
entitled "Mapping Moody's National Scale Ratings to Global Scale Ratings".
PRINCIPAL METHDOOLOGIES
The principal methodology used in rating Agricultural Bank of China Limited,
Bank of China Limited, Industrial & Commercial Bank of China
Ltd, China Construction Bank Corporation, State Elite Global
Limited, Bank of Communications Co., Ltd.,
Bank of Ningbo Co., Ltd., Bank of Shanghai Co.,
Ltd., China CITIC Bank Corporation Limited, China Everbright
Bank Company Limited, China Guangfa Bank Co., Ltd.,
China Merchants Bank Co., Ltd., Shanghai Pudong
Development Bank Co., Ltd., Azure Orbit International
Finance Limited, Ping An Bank Co., Ltd, Skysea
International Capital Management Ltd, Horsepower Finance Limited
and Amipeace Limited was Banks published in January 2016.
The principal methodology used in rating China Everbright Limited was Asset
Managers: Traditional and Alternative published in December 2015.
The methodologies used in rating China Huarong Asset Management Co.,
Ltd., China Cinda Asset Management Co., Ltd.,
China Orient Asset Management Corporation, Charming Light Investments
Ltd. and United Wealth Development Ltd. were Finance Companies
published in October 2015, and Government-Related Issuers
published in October 2014.
The principal methodology used in rating CITIC Securities Company Limited, CITIC Securities Finance MTN Co.,
Ltd., Everbright Securities Company Limited and Guotai Junan
Securities Co., Ltd was Global Securities Industry Methodology
published in May 2013.
The principal methodology used in rating
China Development Bank Corporation, The Export-Import Bank
of China and Agricultural Development Bank of China was Government-Related
Issuers published in October 2014.
The principal methodology used
in rating CDB Leasing Co., Ltd., ICBC Financial
Leasing Co., Ltd., CCB Financial Leasing Corporation
Ltd., ICBCIL Finance Co. Limited and CCBL (Cayman)
Corporation Limited was Finance Companies published in October 2015.
Please see the Ratings Methodologies page on www.moodys.com
for a copy of these methodologies.
The local market analyst for Bank of Communications Co.,
Ltd., Bank of Communications Co., Ltd.
HK Branch, Azure Orbit International Finance Limited, China
Guangfa Bank Co., Ltd., China Merchants Bank
Co., Ltd., China Merchants Bank Co Ltd,
Hong Kong Branch, China Merchants Bank Co Ltd, Luxembourg
Br., China Merchants Bank Co Ltd, New York Branch,
China Merchants Bank Co Ltd, Singapore Branch, Ping An Bank
Co., Ltd, Bank of Ningbo Co., Ltd.,
Bank of Shanghai Co., Ltd., Shanghai Pudong
Development Bank Co., Ltd. and Shanghai Pudong Dev.
Bk Co., Ltd., HK Branch ratings is Yulia Wan,
AVP-Analyst, Financial Institutions Group, +86
(21) 2057-4017.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the credit rating action on the support provider and in relation to
each particular credit rating action for securities that derive their
credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and
in relation to a definitive rating that may be assigned subsequent to
the final issuance of the debt, in each case where the transaction
structure and terms have not changed prior to the assignment of the definitive
rating in a manner that would have affected the rating. For further
information please see the ratings tab on the issuer/entity page for the
respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The below contact information is provided for information purposes only.
Please see the ratings tab of the issuer page at www.moodys.com,
for each of the ratings covered, Moody's disclosures on the
lead analyst and the Moody's legal entity that has issued the ratings.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
The first name below is the lead rating analyst for this Credit Rating
and the last name below is the person primarily responsible for approving
this Credit Rating.
Minyan Liu
Associate Managing Director
Financial Institutions Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077
Stephen Long
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077
Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: (852) 3758 -1350
SUBSCRIBERS: (852) 3551-3077
Moody's changes outlook of 25 Chinese non-insurance financial institutions to negative following sovereign action
