Less than six months ago, China’s central bank made its biggest push yet to tackle inflated credit ratings in the nation’s $5.6 trillion corporate debt market. Now it has a live test case.
Zhuhai Huafa Group Co., a state-owned conglomerate, has retained its top AAA grade from a major local rating firm despite its bonds plunging to distressed levels after news that it missed two trust product payments. Huafa is rated BBB by Fitch Ratings, on the lower end of investment grade. Both companies have put Huafa on negative watch, raising the possibility of a downgrade.
