China’s largest bad-debt managers suffered ratings downgrades by Moody’s Investors Service that cut China Huarong Asset Management to junk status, over concerns arising from the property crisis, reports Caixin. Huarong AMC’s long-term rating was reduced one notch to Ba1, which signifies a higher degree of default risk. Three other peers—China Great Wall Asset Management, China Orient Asset Management and China Cinda Asset Management—also had their ratings cut Friday by one to two notches.
Moody’s action is the latest alarm sounded over the spillover of property sector ills into the wider economy, despite Beijing’s pledges for support policies. It resembles a sector-wide downgrade by Fitch Ratings earlier this year when the ratings firm cited concern over the financial condition of bad-debt managers.
Three of the companies cited by Moody’s—Huarong, Cinda and Orient Asset—were also put on negative outlook. Their asset quality and profitability will remain under pressure due to “the persistent strain on China’s property market and slowing economic growth,” Moody’s said.