Research Update: China Huarong And Subsidiaries Downgraded Amid Weakening Asset Quality; Outlook Negative

We expect the asset quality of China Huarong Asset Management Co. Ltd. to remain weak over the next two years, while its capital and leverage should recover with new capital from strategic investors and the disposal of noncore assets. The importance of China Huarong Financial Leasing Co. Ltd. to the group will reduce as the group refocuses on its core business. On Sept. 9, 2021, we lowered the long-term issuer credit ratings on China Huarong and China Huarong International Holdings Ltd. to 'BBB' from 'BBB+'. We affirmed our 'A-2' short-term issuer credit ratings on the entities. We also lowered the long-term issuer credit rating on Huarong Financial Leasing to 'BBB-' from 'BBB+'. We lowered our short-term issuer credit rating on

...- We expect the asset quality of China Huarong Asset Management Co. Ltd. to remain weak over the next two years, while its capital and leverage should recover with new capital from strategic investors and the disposal of noncore assets. - The importance of China Huarong Financial Leasing Co. Ltd. to the group will reduce as the group refocuses on its core business. - On Sept. 9, 2021, we lowered the long-term issuer credit ratings on China Huarong and China Huarong International Holdings Ltd. to '###' from '###+'. We affirmed our 'A-2' short-term issuer credit ratings on the entities. - We also lowered the long-term issuer credit rating on Huarong Financial Leasing to '###-' from '###+'. We lowered our short-term issuer credit rating on the entity to 'A-3' from 'A-2'. - The outlook on the ratings on China Huarong and its subsidiaries is negative. This reflects our view that the group's leverage is still under pressure, given uncertainties over its recapitalization and asset disposal plan,...

Research Update