MARKETS & INVESTING | Staff Reporter, Hong Kong

Moody's mulls dropping rating of Huarong Financial Leasing

This comes at the back of Moody’s recent ratings review of its parent company.

China Huarong Financial Leasing Co., Ltd. has been placed under review for a possible drop in ratings by Moody’s as its parent company, China Huarong Asset Management Co., Ltd also faces similar circumstances.

Moody’s said that their reasoning for reviewing Huarong Financial Leasing was that the significant changes in their parent company’s credit profile may have had material impact on Huarong Financial Leasings’ own ratings, given the Huarong AMC has a 79.92% stake in the company.

According to the ratings company, the review will focus on what impact, if any, the relevant transaction of Huarong AMC may have on its own financial position; its implications for the credit profile of and the level of support to be assumed for Huarong Financial Leasing; and whether Huarong Financial Leasing can maintain diversified funding sources and adequate liquidity.

“Given that Huarong Financial Leasing's ratings are under review for downgrade, it is unlikely that they will be upgraded over the next 12-18 months,” Moody’s said.

Huarong AMC was placed under review because of the uncertainty stemming from Huarong AMC’s announcement last 31 March that its publication of 2020 annual results would be delayed as a ‘relevant transaction’ is still being finalised and the auditor would need more information and time to complete their audit.
“It is unclear what the details of the relevant transaction are and when its 2020 annual results will be published. The potential impact on Huarong AMC's credit profile is uncertain, because there are a number of diverse scenarios that could affect its BCA and potential government support,” Moody’s said.

The downgrade of Huarong Financial Leasing’s ratings would also impact its indirect wholly-owned subsidiary, Huarong Leasing Management Hong Kong.

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