S&P gives BOC, CCB higher grades
Source: Bloomberg News |
December 1, 2011, Thursday
|
Print Edition
Print Edition
THE Bank of China and China Construction Bank have been upgraded by Standard & Poor's after the ratings firm revised its criteria, giving the Chinese lenders higher grades than most of their largest United States rivals.
BOC and CCB were raised to A from A-, and the Industrial and Commercial Bank of China's rating was maintained at A, according to a statement issued yesterday. The changes reflect the "very high" likelihood of China's government providing help for the lenders in the event of financial distress, S&P wrote in separate statements.
Bank of America, Goldman Sachs and Citigroup had their long-term credit ratings cut to A-, while UBS AG and Barclays Plc were downgraded to A and HSBC Holdings Plc to A+. The Chinese banks' elevation underscores their turnaround since a decade-long overhaul of the state-run lenders that had cost the Asian nation US$650 billion by 2008.
"You look at the liquidity conditions in China, they're very good. You look at the policy impetus, the likelihood of government support, it's very, very high," Tom Quarmby, an analyst at Barclays Capital Inc in Hong Kong, said yesterday. "Whilst lending might be higher risk, it's just lending, it's not exotic derivatives businesses or investment banking."
S&P, a unit of New York-based McGraw-Hill Cos, has been changing the way it looks at debt after its grades contributed to the credit-market seizure that brought down Lehman Brothers Holdings Inc and Bear Stearns Cos.
BOC and CCB were raised to A from A-, and the Industrial and Commercial Bank of China's rating was maintained at A, according to a statement issued yesterday. The changes reflect the "very high" likelihood of China's government providing help for the lenders in the event of financial distress, S&P wrote in separate statements.
Bank of America, Goldman Sachs and Citigroup had their long-term credit ratings cut to A-, while UBS AG and Barclays Plc were downgraded to A and HSBC Holdings Plc to A+. The Chinese banks' elevation underscores their turnaround since a decade-long overhaul of the state-run lenders that had cost the Asian nation US$650 billion by 2008.
"You look at the liquidity conditions in China, they're very good. You look at the policy impetus, the likelihood of government support, it's very, very high," Tom Quarmby, an analyst at Barclays Capital Inc in Hong Kong, said yesterday. "Whilst lending might be higher risk, it's just lending, it's not exotic derivatives businesses or investment banking."
S&P, a unit of New York-based McGraw-Hill Cos, has been changing the way it looks at debt after its grades contributed to the credit-market seizure that brought down Lehman Brothers Holdings Inc and Bear Stearns Cos.
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