{"id":136574,"date":"2021-08-24T05:16:31","date_gmt":"2021-08-24T05:16:31","guid":{"rendered":"https:\/\/precoinnews.com\/?p=136574"},"modified":"2021-08-24T05:16:31","modified_gmt":"2021-08-24T05:16:31","slug":"update-1-moodys-downgrades-china-huarong-over-16-billion-loss","status":"publish","type":"post","link":"https:\/\/precoinnews.com\/markets\/update-1-moodys-downgrades-china-huarong-over-16-billion-loss\/","title":{"rendered":"UPDATE 1-Moody's downgrades China Huarong over $16 billion loss"},"content":{"rendered":"
(Adds Fitch rating watch, bond price)<\/p>\n
SHANGHAI, Aug 24 (Reuters) – Moody\u2019s Investor Service on Monday cut credit ratings for Chinese state-owned asset manager China Huarong Asset Management Co, citing the company\u2019s warning that it expects to book a net loss of nearly $16 billion for 2020.<\/p>\n
Huarong said last week its 2020 net loss would be 102.9 billion yuan ($15.88 billion), due to what it said was a large change in provision for credit impairment, and said a state consortium led by the Citic Group Corp had agreed to make a strategic investment in the company.<\/p>\n
The company, one of four debt collectors created by China\u2019s Finance Ministry in 1999 to process bad loans made by China\u2019s biggest banks, had missed a March 31 deadline for filing its 2020 earnings, sparking a rout in its U.S. dollar-denominated bonds that spread to other Chinese issuers.<\/p>\n
In a statement late on Monday, Moody\u2019s said it had downgraded Huarong\u2019s local and foreign currency long-term issuer ratings by one notch to Baa2 from Baa1. The ratings remain on review for further downgrades, it said.<\/p>\n
Moody\u2019s also downgraded the long-term backed senior unsecured debt ratings for Huarong\u2019s offshore financing vehicles by one notch to Baa3 from Baa2. Baa3 is the lowest investment-grade rating on the Moody\u2019s long-term issuer rating scale.<\/p>\n
\u201cToday\u2019s rating actions reflect the deterioration of Huarong AMC\u2019s capital and profitability due to large amounts of net losses incurred in 2020 … Such net losses could result in a failure to comply with the minimum regulatory requirements on capital adequacy and leverage, and indicate that the company cannot sustain its operation without support arranged by the government,\u201d Moody\u2019s said.<\/p>\n
Fitch Ratings, in contrast, said late on Monday that it had raised its rating watch on Huarong\u2019s long-term issuer default rating, and notes issued by its subsidiaries, to positive from negative, based on the company\u2019s recapitalisation plan.<\/p>\n
\u201cWe regard the plan as a step towards the company alleviating its financial stress amid its expected net loss, and believe it reduces the uncertainty that we captured in the Rating Watch Negative previously,\u201d Fitch said.<\/p>\n
Bids on a 4% Huarong perpetual bond issued by Huarong Finance 2017 Co Ltd slipped about two-tenths of a cent to 92.687 cents on Tuesday, according to data provider Duration Finance.<\/p>\n