(The following statement was released by the rating agency)
Oct 12 - China has been unable to sustain its growth momentum in the year ofthe dragon, leading Standard & Poor's economists to lower their growthexpectations for the country, according to a Global Fixed Income Research reporttitled "Emerging Markets Credit Metrics: Rating Trends In China Turn Negative."
"Corporate downgrades have been increasing and the country's negative bias hasedged up," said Diane Vazza, Managing Director for Global Fixed IncomeResearch. "However, investors continue to wait for the government to introducegrowth-stimulating measures and lead global recovery."
Key highlights from China's credit metrics include:
-- China's real GDP growth rate declined to 7.6% in the second quarter of2012, from 8.1% in the first quarter. Last month, Standard & Poor's loweredits expectation of China's 2012 GDP growth rate to 7.5% from 8%, citing weakexports and investment growth in the country. Although domestic consumptionwas the leading factor behind the country's economic growth until 2004, theproportion of investments-to-GDP has been rising during the past decade andthis has further increased the importance of government policies instimulating economic growth. While the government's monetary and fiscalstimulus helped drive growth after the global financial crisis of 2008, theadministration has not been as aggressive this time around--as it faces highinflation and a major leadership transition. As a result, China's below-trendgrowth has dragged.
-- Standard & Poor's coverage of issuer credit ratings in China hasincreased significantly since 2008, with 73% of the 96 rated corporateentities in the country assigned their first rating in 2008 or later. Standard& Poor's rates about 60% of issuers in China speculative grade ('BB+' andlower) and about 56% in the 'BB/B' rating categories.
The report is available to subscribers of RatingsDirect on the Global CreditPortal at . If you are not a RatingsDirectsubscriber, you may purchase a copy of the report by calling (1) 212-438-7280or sending an e-mail to firstname.lastname@example.org. Ratingsinformation can also be found on Standard & Poor's public Web site by usingthe Ratings search box located in the left column at .Members of the media may request a copy of this report by contacting the mediarepresentative provided.
(Caryn Trokie, New York Ratings Unit)