In our view, substantial goodwill is to be created upon acquisition of Nanyang Commercial Bank, thus significantly hitting distressed-asset manager China Cinda's capitalization despite continued internal accruals from its adequate profitability. China Cinda's aborted share placement to SinoBiopharm reflects significant uncertainty on how and when the company could replenish its capitalization to a level that would underpin the current rating. We are revising the implications of our CreditWatch on the ratings on Cinda HK to developing from negative to reflect the potential for the company to be reassessed as a core subsidiary and the continued downward rating pressure on the group. We do not expect the recent outlook revision on China to add further pressure on our ratings on China
