Huatai Securities' ability to absorb losses has strengthened based on its very strong capital ratio. In our view, the China-based securities firm has a solid capacity to grow capital from earnings retention and generally conservative risk-taking activities. Accordingly, we upgraded Huatai Securities and its offshore subsidiary Huatai International to 'BBB+/A-2'. At the same time, we raised the long-term issue ratings on the senior unsecured debt guaranteed by Huatai Securities to 'BBB+'. The stable outlook reflects our view that Huatai Securities will maintain its very strong capitalization, leading position in most of its businesses, sound risk management, and adequate liquidity position. We also expect a moderately high likelihood of the entity receiving extraordinary support from the Jiangsu provincial government, if needed.
