Moody's Investors Service lowered China's outlook to stable from positive after Fitch Ratings downgraded one of its sovereign ratings of the country last week.
It made the change because the scope and pace of credit-positive structural reforms under the new mainland leadership may not be sufficient over the course of the next 12-18 months to justify a rating upgrade, Moody's said yesterday.
The firm also lowered Hong Kong's outlook to stable in conjunction with the change in that of China.
Moody's affirmed China's government bond rating of Aa3. It also affirmed Hong Kong's government bond rating at Aa1 to reflect a strong and competitive economy, very high government financial strength and considerable resilience to shocks.
However, Moody's said, the risk profile of Hong Kong was adversely affected by its vulnerability to credit shocks that might emanate from the mainland.
A Standard & Poor's spokeswoman said her firm had no adjustments at present to the firm's ratings for China and Hong Kong. Its credit rating for China is AA-minus and for Hong Kong it is AAA, both with a stable outlook.