Fitch Lays Out Factor That May Cause Rethink of China Rating
- Growth in non-govt debt key to any Fitch rating rethink
- McCormack not expecting China to extend balance sheet
This article is for subscribers only.
Fitch Ratings Ltd. said it may reconsider China’s A+ sovereign credit score, adding to the growing pessimism toward the nation’s financial markets.
If China extends its balance sheet to support the economy, “we might think again, because the debt-to-GDP ratio is a little bit on the high side for a single ‘A’ credit,” James McCormack, global head of sovereigns, told Bloomberg TV. “I wouldn’t say we’re expecting that, certainly recent evidence doesn’t suggest that would be the case,” but an increase in debt in the corporate and banking sector could become “real liabilities for the government.”