High debt-funded growth is negatively affecting China Huarong's credit profile, especially under a heightened economic risk environment in China. Financial leverage of the non-bank operations on an ongoing basis could exceed our threshold for a downgrade review, particularly without sufficient and timely new equity raising. Credit deterioration of the banking subsidiary also contributes to this pressure. We are placing the following on CreditWatch with negative implications: our long-term issuer credit ratings on China Huarong and its Hong Kong-based subsidiary Huarong International, and our issue rating on debt that Huarong International guarantees. We aim to resolve the CreditWatch placement within the next three months when we have more clarity on China Huarong's capital-raising plan and the growth appetite in the bank
