Moody’s cuts ratings of 26 Chinese state firms after sovereign downgrade

Moody’s Investors Service has cut the ratings of 26 Chinese state-backed enterprises on Wednesday, hours following the rating agency’s first downgrade of Chinese sovereign credit rating since 1989.

The ratings of the firms, which are ultimately owned by the government, were revised down by one notch, Moody’s said in a statement. The evaluations were partly decided by “the rating or credit quality of government providing support”, it said.

A downgrade could increase the debt financing cost for the companies.

Among the affected companies were China Mobile, China National Offshore Oil Corporation and its finance arm and China Petrochemical Corporation.

The Ministry of Finance responded to Moody’s sovereign downgrade with a statement on its website saying the agency used “inappropriate” methods to overestimate the country’s economic difficulties and underestimated Beijing’s ability to handle such challenges.