Fitch cuts four China asset managers

Fitch Ratings said it downgraded the issuer default ratings of four Chinese national asset management companies (AMCs) by one notch, reflecting reduced government support expectations. The agency lowered China Cinda Asset Management Co., Ltd. and China Orient Asset Management Co., Ltd. to A-, from A and China Huarong Asset Management Co., Ltd. and China Great Wall Asset Management Co., Ltd. to BBB from BBB+.

“The national AMCs' ratings are driven by our expectation of government support from the China sovereign (A+/stable). The downgrades reflect our view that the government's propensity to provide timely extraordinary support to the national AMCs has weakened in light of some AMCs' financial underperformance and capital constraints, and the government's inconsistent support stance to the sector. We believe these dynamics have reduced the AMCs' ability to effectively perform their policy role of purchasing non-performing assets in the system,” Fitch said in a press release.

The agency also cut China Great Wall International Holdings IV Ltd.’s senior unsecured rating to BBB from BBB+ and its senior unsecured hybrid capital notes to BBB- from BBB, China Great Wall International Holdings V Ltd.’s senior unsecured rating to BBB from BBB+, Huarong Finance II Co. Ltd.’s senior unsecured rating to BBB from BBB+, Huarong Finance 2019 Co., Ltd.’s senior unsecured rating to BBB from BBB+ and its subordinated rating to BB- from BB and Huarong Finance 2017 Co., Ltd.’s senior unsecured rating to BBB from BBB+.

Fitch concurrently downgraded China Cinda (2020) I Management Ltd.’s senior unsecured rating to A- from A, China Cinda Finance (2014) Ltd.’s senior unsecured rating to A- from A, China Cinda Finance (2015) I Ltd.’s senior unsecured rating to A- from A, China Cinda Finance (2017) I Ltd.’s senior unsecured rating to A- from A, China Cinda (2020) I Management Ltd.’s senior unsecured rating to A- from A, Joy Treasure Assets Holdings Inc.’s senior unsecured rating to A- from A, Charming Light Investments Ltd.’s senior unsecured rating to A- from A and China Cinda (HK) Holdings Co. Ltd.’s IDRs to A- from A.

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