Economic Trend News
- Moody's Investors ups debt rating to A1
Date: 27-Jul-2007 Sources: (Shenzhen Daily)
THE country received its highest-ever debt rating from Moody's Investors Service, buoyed by US$1.3 trillion in foreign reserves that protect the economy from external shocks.
The long-term foreign-currency rating rose one level to A1, the fifth-highest ranking, Moody's said in a statement Thursday. The ratings company assessed China's local-currency debt for the first time, assigning the same level.
'This will help to reduce the financing costs of the Chinese Government and companies,'' said Sun Mingchun, an economist at Lehman Brothers Holdings Inc. in Hong Kong.
Lower borrowing costs may spur domestic companies to add to the record US$25 billion of international acquisitions proposed in the past year, led by a planned investment in Barclays Plc.
China's economy, the world's fourth-largest, grew 11.9 percent in the second quarter, the fastest pace in more than 12 years, powered by exports that pushed reserves to a world record.
'China's very strong external payments position provides insulation from external shocks and allows the authorities time to expand and deepen structural reform,'' said Moody's senior vice president Tom Byrne. Financial or economic turbulence would not likely damage the government's creditworthiness, Byrne said.
Moody's highlighted the improved strength and supervision of the country's large State-owned commercial banks when making the upgrade. China spent 3.5 trillion yuan (US$460 billion) bailing out and recapitalizing the lenders since 1998, according to the ratings company.
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