Ratings on corporations in Greater China slided

Singapore, July 5: Ratings on corporations operating in Greater China slided from January 1, 2006 to June 29, 2007, reflecting heightened credit risks as companies pursued debt-funded acquisitions, said the international rating agency Standard&Poor's today.

However, the default rate remained low.

''Over the near term, corporate credit quality in the region should be stable, underpinned by sound economic fundamentals,'' said Standard&Poor's credit analyst Lawrence Lu in a report 'Overall Credit Quality Remains Sound As Greater China Corporates Pound The Growth Trail'.

Standard&Poor's has rated 28 new issue ratings and 19 corporate credit issuer ratings in China, Hong Kong, and Taiwan over the past 18 months. Some 32 of the 76 total issuers are now categorized below 'BBB-', highlighting the influx of high-yield issuers in this region.

Chinese real-estate developers led the drive to the capital markets, particularly in Hong Kong, in a bid to shore up their land banks and re-finance, it said, acknowledging investors' strong appetite for high-yield bonds in Greater China.

UNI