S&P cuts HK rating after China downgrade

Hong Kong: Standard & Poor’s on Friday slashed Hong Kong’s top-notch credit rating, a day after lowering China’s, warning of potential spillover risks the mainland’s ballooning debt pile. S&P, which said the semi-autonomous city had “very strong institutional and political linkages” with China, slashed its rating to AA-plus from the highest AAA. The moves followed Moody’s decision to downgrade China and Hong Kong earlier this year. “We view a weakening of credit support for China as exerting a negative impact on the ratings on Hong Kong beyond what is implied by the territory’s currently strong credit metrics,” the agency said in a statement. Despite Hong Kong’s “very strong” credit metrics, S&P said it still faces multiple challenges including sky-high property prices and rising interest rates in the United States, to which the city’s monetary policy is tied. Chief Asia economist at Union Bancaire Privee Mark McFarland said Hong Kong’s downgrade was a “natural step”. — AFP