Standard & Poor’s (McGraw-Hill; MHP.NYSE) raised China’s sovereign credit rating to AA minus from A plus in recognition of the country’s "exceptional growth prospects," Reuters reported. Moody’s (MCO.NYSE) raised China’s rating to a similar level in November. Explaining its decision, S&P highlighted the government’s light debt load, a strong external asset position as well as the positive economic outlook. It said these factors more than offset any banking sector credit problems that might arise in response to a sharp economic downturn. "We may raise the ratings again if structural reforms lead to sustained economic growth that significantly lifts the average income level," said Kim Eng Tan, an S&P credit analyst. Conversely, he added that a weakening in reform efforts, combined with deteriorating economic performance, could trigger a downgrade. Fitch is now the only major credit agency to rate China at A plus, one notch below the S&P and Moody’s ratings.
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