Huarong AMC at risk of a Moody's rating downgrade

The company’s ratings are currently under review, but negative sentiments persist.

China Huarong Asset Management Co. Ltd. (Huarong AMC)’s A3 long-term, P-2 short-term issuer and b1 baseline credit assessment (BCA) have been placed under review for downgrade, Moody’s Investors Service has said.

The debt ratings and medium-term note program ratings of Huarong AMC’s offshore financing vehicles are also under review.

The review, in particular, will focus on the impact of the relevant transaction on the company’s financial position and BCA as well as the implications for the level of support the government should assume for Huarong AMC and its offshore funding platform.

It will also look into whether Huarong AMC can maintain diversified funding sources and adequate liquidity.

“Today's rating actions reflect the uncertainty stemming from Huarong AMC's announcement on 31 March 2021 that the publication of its 2020 annual results would be delayed as a relevant transaction is still being finalised and the auditor would need more information and time to complete the necessary audit procedures,” the agency said.

Moody’s also assessed that Huarong AMC may face increasing refinancing risk due to market volatility, tempered by the amount of maturing bonds over the next 12 months which are not significant compared to its total assets.

“Huarong AMC relies heavily on confidence-sensitive wholesale funding to support its assets,” Moody’s noted.