Bulletin: China Huarong's 2016 Results Have No Rating Impact; Rapid Asset Growth And Increasing Leverage Remain Constraints

HONG KONG (S&P Global Ratings) March 20, 2017--S&P Global Ratings said today that rapid asset growth and rising financial leverage could continue to exert downward rating pressure on Chinese distressed assets manager China Huarong Asset Management Co. Ltd. (China Huarong: A-/Negative/A-2; cnAA-/cnA-1) and its Hong Kong-based subsidiary China Huarong International Holdings Ltd. (Huarong International: BBB+/Negative/A-2; cnA+/cnA-1). The ratings on both entities are unaffected by their satisfactory 2016 results. In our view, China Huarong's rapid asset expansion through debt financing has further stretched its financial leverage despite good internal capital accruals from its earnings. China Huarong's total assets grew 62.9% and total managed assets, including assets under management, grew 56.9% in 2016. That was faster than our expectation and significantly outpaced

...HONG KONG (S&P Global Ratings) March 20, 2017--S&P Global Ratings said today that rapid asset growth and rising financial leverage could continue to exert downward rating pressure on Chinese distressed assets manager China Huarong Asset Management Co. Ltd. (China Huarong: A-/Negative/A-2; cnAA-/cnA-1) and its Hong Kong-based subsidiary China Huarong International Holdings Ltd. (Huarong International: ###+/Negative/A-2; cnA+/cnA-1). The ratings on both entities are unaffected by their satisfactory 2016 results. In our view, China Huarong's rapid asset expansion through debt financing has further stretched its financial leverage despite good internal capital accruals from its earnings. China Huarong's total assets grew 62.9% and total managed assets, including assets under management, grew 56.9% in 2016. That was faster than our expectation and significantly outpaced the company's 36.3% growth in net profits and 14% capital accumulation after a proposed 30% dividend payout. The mostly debt-funded...

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