S&P views Hangzhou Finance negatively

S&P said it changed its outlook for Hangzhou Finance And Investment Group Co. Ltd. to negative from stable and affirmed its BBB long-term rating. The agency does not rate Hangzhou’s notes, which were sold through its HFI International unit.

“HFIG is increasingly exposed to volatile products or investments amid its weakening competitive position in China's asset management segment, in our view. While the group's trust assets under management (AUM) continued to grow by an average of 12% over 2021 and 2022, trust fees and commissions, which we deem more stable, declined by 69% over the same period,” the agency said in a statement.

On the positive side, S&P noted it expects the company to continue its “very strong links with the Hangzhou city government and play a very important policy role over the next two years. The group should therefore continue to benefit from a very high likelihood of extraordinary government support, if necessary. We also expect the government's credit profile to be stable over the next two years.”

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