Moody's eyes Huarong AMC for downgrade

Moody's Investors Service said it placed the Baa2 long-term of China Huarong Asset Management Co., Ltd. (Huarong AMC) under review for downgrade.

The agency also placed the debt ratings and medium-term note program ratings of Huarong AMC's offshore financing vehicles under review for downgrade. These include the Baa3 long-term backed senior unsecured debt ratings and the (P)Baa3 backed senior unsecured MTN program ratings of Huarong Finance 2017 Co., Ltd. and Huarong Finance II Co., Ltd., as well as the Baa3 long-term backed senior unsecured debt rating and the (P)Baa3 long-term senior unsecured MTN program ratings of Huarong Finance 2019 Co., Ltd.

The review was prompted by Huarong AMC’s profit warning on Sunday that it would post a net loss attributable to the company's shareholders of about RMB 27.6 billion in 2022 because of fair value losses on equity investments.

Moody’s said its review will consider new information on Huarong AMC's asset quality and profitability outlook, the effect of the net loss in 2022 and equity investments in China Everbright Bank on Huarong AMC's capital adequacy ratios and leverage and its plan to replenish capital, including potential assistance from its major shareholder, Citic Group Corp., or the government of China.

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