S&P lowers Hong Kong rating following China downgrade

Lloyd Doyle
September 22, 2017

S&P Global Ratings lowered its sovereign rating on Hong Kong citing spillover risks after lowering the ratings on China.

"We view a weakening of credit support for China as exerting a negative impact on the ratings on Hong Kong beyond what is implied by the territory's now strong credit metrics", the agency said in a statement.

In cutting Hong Kong's rating to "AA+" from "AAA", the ratings agency cited the "very strong and institutional and political linkages" between the mainland and the special administrative region.

Ratings agency Moody's downgraded China in May, the first time in nearly three decades that the nation's credit rating was cut. "It has been widely anticipated that S&P would eventually follow the others and that Hong Kong would be dropped a notch too".

S&P changed Hong Kong's outlook to stable from negative on Friday, and said it expected Hong Kong to "maintain its strong credit metrics across the board in the next two to three years".

The agency lowered China's rating one notch on Thursday, saying strong credit growth had raised the country's economic and financial risks and reduced its financial stability. Because the former British colony's currency is pegged to the USA dollar, it effectively imports USA monetary policy. The move may also be uncomfortable for Communist Party officials, who are just weeks away from their twice-a-decade leadership reshuffle.

Other reports by Iphone Fresh

Discuss This Article