Big SOEs able to handle revamp better
Print Edition
LARGE and state-owned enterprises are more resilient and able to withstand stresses arising from China’s restructuring of its economy from exports and investments to a consumption-driven model, Moody’s Investors Service said yesterday.
The shift is likely to result in tighter credit conditions while a decelerating economic growth poses financial risks especially to smaller companies across sectors, according to the rating agency.
Moody’s said that large companies are likely to have ready access to funding markets even as credit becomes tighter, and state-owned enterprises may still get government support if they suffer significant financial distress.
“The situation in the steel industry is a good example, where default risks among small, privately owned companies may be rising, but the largest players are state-owned, like Baosteel Group Corp,” said Michael Taylor, Moody’s chief credit officer for Asia-Pacific.
“As a result, we believe Baosteel, and others like it, will gain further market share and benefit from the consolidation trends likely to emerge in that sector.”
Moody’s places China’s Big-Five state-owned banks in the same category as Baosteel.
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