Moody’s affirms Cinda HK’s ratings, changes outlook to stable

Investing.com -- Moody’s Ratings has affirmed China Cinda (HK) Holdings Company Limited’s Baa2/P-2 local and foreign currency issuer ratings while changing the outlook to stable from negative.

The rating agency also downgraded Cinda HK’s notional Baseline Credit Assessment (BCA) to b1 from ba3, according to a statement released Monday.

Moody’s affirmed the Baa2 long-term local currency backed senior unsecured debt ratings and the (P)Baa2/(P)P-2 program ratings of China Cinda (2020) I Management Limited. The agency also maintained similar ratings for China Cinda Finance (2017) I Limited’s debt and the program ratings of China Cinda Finance (2015) I Limited and China Cinda Finance (2017) I Limited.

These financing vehicles are guaranteed by Cinda HK, which is a wholly owned subsidiary of China Cinda Asset Management Co., Ltd. (Cinda AMC, Baa1 stable).

The affirmation reflects Moody’s expectation that the very high level of support from Cinda AMC and indirect support from the Government of China (A1 negative) will remain stable. This support offsets Cinda HK’s weakened credit profile resulting from persistently weak profitability and capital adequacy.

Cinda HK’s tangible common equity to risk-weighted assets ratio has remained negative since 2022, primarily due to goodwill from the 2016 acquisition of Nanyang Commercial Bank, Ltd. (NYCB, Baa1 negative, baa2) and sustained net losses from high impairment charges and elevated interest expenses.

Despite these challenges, Moody’s expects Cinda HK to maintain sound liquidity with robust funding access from Cinda AMC, including substantial credit facilities from multiple financial institutions and offshore funding arrangements.

The stable outlook reflects Moody’s expectation that NYCB’s relatively stable performance and continued strong liquidity support from Cinda AMC will mitigate pressures on asset quality and capital adequacy over the next 12–18 months.

In February 2025, Cinda AMC announced that the Ministry of Finance will transfer its 58% stakes to Central Huijin Investment Ltd. While this transfer awaits regulatory approval, Moody’s believes Cinda HK’s credit profile could benefit from Central Huijin’s resources over the long term.

The ratings could be upgraded if Cinda AMC’s issuer ratings are upgraded or if Cinda AMC provides a direct guarantee. Conversely, a downgrade could occur if Cinda AMC’s ratings are downgraded, if there are signs of weakening support from the parent, or if Cinda HK’s notional BCA is significantly downgraded.

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