Credit-rating agency Moody’s has downgraded Bank of Communications, China’s fifth-largest lender by assets, to junk status citing its increasing reliance on pricey and volatile wholesale funding. The agency downgraded BoCom’s baseline credit assessment one notch to Ba1 from Baa3, crossing the divide between investment grade and junk, the Financial Times reports. “The downgrade of BoCom’s BCA is driven by its weaker funding profile when compared to other state-owned Chinese banks, as well as its pressured profitability as a result of an environment of increasing market funding costs,” Moody’s said in the announcement. Shanghai-based BoCom holds an intermediate status in China’s banking system. Mid-sized lenders have relied increasingly on non-deposit sources of funding in recent years – mainly in the interbank money market – as Chinese savers have looked for higher-yielding alternatives to bank deposits. But such funding is more expensive, especially this year, when the central bank tightened liquidity and guided interbank rates higher.