Fitch lowers ratings for 38 Chinese state-owned corporates and subsidiaries

Investing.com -- Fitch Ratings has lowered the Long-Term Issuer Default Ratings (IDRs) of 38 corporates and subsidiaries owned by the Chinese central government. The outlook on the IDRs remains stable.

In addition to the IDRs, Fitch has also downgraded their senior unsecured ratings and debt instrument ratings, if applicable. These downgrades come after Fitch lowered China's sovereign rating to 'A/Stable' from 'A+/Negative' on April 3, 2025.

The IDRs of five government-related entities (GREs) are equal with China's sovereign rating. These entities are CRRC Corporation Limited, China Baowu Steel Group Corporation Limited, China General Nuclear Power Corporation, China Southern Power Grid Co., Ltd, and China Three Gorges (SS:600116) Corporation.

Three GREs have their IDRs one notch below China's sovereign rating. These are China Huadian Corporation Ltd., China Huaneng Group Co., Ltd., and State Power Investment Corporation Limited.

Five GREs have their IDRs two notches below China's sovereign rating. These include Aluminum Corporation of China, China Communications Construction Company Limited, China Minmetals Corporation, China Railway Group (HK:0390) Limited, and Power Construction Corporation of China.

China National Petroleum Corporation and State Grid Corporation of China have Standalone Credit Profiles (SCPs) stronger than the sovereign rating, but their IDRs are capped at the sovereign rating.

Twenty-three entities are equalized or rated based on a top-down approach from their respective parents. These include Aluminum Corporation of China Limited, Baoshan Iron & Steel Co. Ltd., Baosteel Resources International Company Limited, and CGN Energy International Holdings Co., Limited, among others.

Negative rating action on the sovereign could lead to further downgrades, while positive rating action on the sovereign could lead to upgrades. Fitch outlined these sensitivities in its ratings action commentary on April 3, 2025.

For the sovereign rating of China, factors that could lead to negative rating action include a rapid increase in general government debt/GDP or significantly reduced confidence in medium-term growth prospects. On the other hand, faster deficit reduction, stronger medium-term growth prospects, or a material reduction in macro-financial risks could lead to positive rating action.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.