Credit rating agency Moody’s has downgraded its outlook for Chinese sovereign bonds to negative, citing risks from a slowing economy and a crisis in its property sector
Credit rating agency Moody’s cut its outlook for Chinese sovereign bonds to negative on Tuesday, citing risks from a slowing economy and a crisis in its property sector.
Moody’s said the downgrade, its first for China since 2017, reflects risks from financing troubles of local and regional governments and state-owned enterprises.
The world’s second-biggest economy had been slowing before a 2020 crackdown on excessive borrowing brought on defaults by dozens of property developers. Those troubles have crimped local government finances and also imperiled some lenders, further dragging on the economy.
The need for government intervention to support banks and local governments poses “broad downside risks to China’s fiscal, economic and institutional strength.
