Moody’s changes 22 GRIs to stable

Moody's Investors Service said it changed the outlooks on 22 Chinese government-related issuers (GRIs) and rated GRI subsidiaries to stable from negative.

At the same time, the agency affirmed all the ratings of these GRIs and subsidiaries.

The outlooks on the following GRIs were revised: Shenzhen International Holdings Ltd.; China Longyuan Power Group Corp. Ltd.; China Resources Power Holdings Co., Ltd.; China Resources Gas Group Ltd.; Changchun Urban Development & Investment Holdings (Group) Co. Ltd.; Zhuzhou City Construction Development Group Co. Ltd.; China Travel Service (Holdings) Hong Kong Ltd.; Poly Real Estate Group Co. Ltd.; Hengli (Hong Kong) Real Estate Ltd.; China State Construction Engineering Corp. Ltd.; China State Construction International Holdings Ltd.; Sinochem Hong Kong (Group) Co. Ltd.; China Communications Construction Co. Ltd.; China Metallurgical Group Corp.; China Railway Construction Corp. Ltd.; China Railway Group Ltd.; CRRC Zhuzhou Locomotive Co., Ltd.; Hangzhou Hikvision Digital Technology Co., Ltd.; Sinopec Engineering (Group) Co., Ltd.; Shanghai Electric (Group) Corp.; Shanghai Electric Group Co. Ltd.; and Beijing State-Owned Assets Management Co., Ltd.

Recent evidence that policy support for these companies – either directly from their owner governments or indirectly through their government-owned parents – is unlikely to change over the medium-term, notwithstanding government efforts to reform state-owned enterprises (SOEs), Moody’s said.

Such entities operate in strategic sectors or play key roles in supporting the central government's objectives. These sectors have benefitted from government statements reaffirming support for them in recent months. This situation contrasts with clear examples of lower support for less prominent entities, which are engaged primarily in commercial activities, especially in industries suffering from production overcapacity.

All GRI defaults in 2016 have been concentrated in the latter sector.

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