Moody's has also assigned a Baa1 rating to the proposed bonds to be issued by
The outlook on all ratings is stable.
"China Huarong's A3 rating incorporates its ba3 stand-alone baseline credit assessment (BCA) and a six-notch uplift based on very strong likelihood of support from the Chinese government (Aa3 stable) in a stress situation," says
Nevertheless, Moody's expects the government to retain majority ownership in the company following the latter's capital raising exercises.
China Huarong has an important policy role as one of four asset management companies established by the
Moody's expects China Huarong's policy importance to increase as
"China Huarong's BCA recognizes the company's leading and entrenched position in
At the same time, China Huarong's BCA takes into account the impact of expected rapid growth on the company's risk management and asset quality, and pressure on its balance sheet leverage. The company has relatively high standalone balance sheet leverage in terms of its unconsolidated equity/asset ratio, taking into account its majority-controlled bank and financial leasing subsidiaries.
The BCA also takes into account the company's reliance on wholesale funding and its relatively concentrated credit exposure to the real estate sector.
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