Skip to content
Subscriber Only

China's Rating Cut Exposes Firms Hooked on Dollar Borrowing

  • Airlines, shippers, state-owned enterprises seen most affected
  • Pricey overseas debt will cut into profit, pressure economy
Video player cover image

Assessing China's Credit Risks

Updated on

China’s first credit rating downgrade by Moody’s Investors Service since 1989 couldn’t have come at a worse time for the nation’s companies, which have never been more reliant on the overseas bond market for funding.

While Chinese companies’ foreign-currency debt is only a fraction of the $9 trillion local bond market, China Inc. is on pace for record dollar bond sales this year after the authorities’ crackdown on financial leverage drove up borrowing costs at home. Overseas borrowing has also been part of the government’s strategy to encourage capital inflows in a bid to ease the depreciation pressure on the yuan.