China's wide-ranging infrastructure projects with developing countries along the Silk Road link that are planned or underway, have an estimated worth of more than $900 billion, analysts at Fitch Ratings said in a report.
On Thursday, S&P Global ratings affirmed 'AA-/A-1+' sovereign credit ratings on China, while noting government moves to take on debts run-up by local government has "significantly reduced the banks' credit risks, in our view."
But even with the Asian Infrastructure Investment Bank (AIIB) to support the funding needs of the OBOR and China's pledged $40 billion Silk Road Fund, most of the capital will likely come from Chinese policy banks or large commercial banks.
"One Belt One Road's emphasis on large-scale capital-intensive infrastructure investments abroad is aimed at channeling surplus domestic savings away from less productive domestic uses and at relieving overcapacity pressures," Jack Yuan, associate director at Fitch Ratings, told CNBC.
"Since the bulk of China's savings are concentrated in the banking system, it is only natural that banks should provide most of funding for OBOR," Yuan explained.
China's three policy banks - Agricultural Development Bank of China (ADBC), China Development Bank (CDB), and the Export-Import Bank of China (Chexim) - have been given 'A+' ratings by Fitch Ratings, while its largest commercial banks have 'A' to 'A+' ratings.
Overseas loans from Chinese banks are estimated to be worth $1.2 trillion, of which a large portion has gone to financing infrastructure projects involving Chinese state-owned enterprises, the report said.
But these projects might fail to deliver expected returns as political motivations take priority over the commercial viability of some OBOR projects, the ratings agency warned.