China‘s Credit Rating Cut as S&P Cites Risk From Debt Growth

The sovereign rating was cut by one step, to A+ from AA-, the company said in a statement late Thursday. The analysts also lowered their rating on three foreign banks that primarily operate in China, saying HSBC China, Hang Seng China and DBS Bank China Ltd. would be unlikely to avoid default should the nation default on its sovereign debt.

„China‘s prolonged period of strong credit growth has increased its economic and financial risks,“ S&P said. „Although this credit growth had contributed to strong real gross domestic product growth and higher asset prices, we believe it has also diminished financial stability to some extent.“