China: Life after rating downgrade - Rabobank
|Rating agency Standard & Poor’s cut China’s credit rating from AA- to A+ with a stable outlook which is their first downgrade since 1999 and follows the one by Moody’s from last May, notes the analysis team at Rabobank.
Key Quotes
“The agency’s analysts noted that “China’s prolonged period of strong credit growth has increased its economic and financial risk”, stating the obvious on a theme that should sound familiar to most Global Daily-readers. Our globetrotter Michael “Magic Mike” Every repeatedly points out that even though China promises a lot, it has so far seen no actual deleveraging. It continuously kicks the can down the road and keeps the air in its massive housing bubble. In fact, given how much China’s debt has ballooned in recent years, any forced deleveraging actually risks a major economic reverse – and for that reason there is still cause for scepticism that they will ultimately achieve this.”
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