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Credit FAQ: Chinese Local Government Debt Is In The Spotlight Once Again Jul 11
Standard & Poors, July 2011
Local government debt concerns in China (AA-/Stable/A-1+; cnAAA/cnA-1+) have intensified yet again. This is not a new worry (see "Is Chinese Public Finance As Good As It Looks?", published Sept. 4, 2006, and "Credit FAQ: How Big A Worry Are Chinese Local Government Debts?", published March 14, 2010, on RatingsDirect on the Global Credit Portal). Many have expected nonperforming loans at banks to soar since 2009, when lending growth took off. In late 2009, local government-owned companies known as financing platforms or LGFPs became the center of attention as a major source of credit risk to banks. Chinese local governments at all levels had set up LGFPs to carry out public projects such as urban infrastructure and utilities. In the...
Companies mentioned in this report are: China (People's Republic of )
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
China (People's Republic of )