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Standard & Poor’s Ratings Services has revised the outlooks on China Development Bank (CDB) and Export-Import Bank of China (China Ex-Im) to positive from stable. At the same time, Standard & Poor’s affirmed the long-term ratings on CDB and China Ex-Im at ‘BBB+’, and the short-term rating on China Ex-Im at ‘A-2’. Standard & Poor’s also affirmed its ‘A-2’ short-term foreign currency rating on CDB.

The ratings on both banks reflect the strong support from the sovereign (China; A-/Positive/A-1), their sole owner, and the banks’ respective policy roles. However, the rating difference between the banks and the sovereign reflects some uncertainty over the financial arrangements in times of stress. The lack of statutory or ultimate guarantees, except for foreign government loans to China channeled through both banks, due to China’s opaque policy environment may imply a degree of uncertainty incompatible with higher rating categories.


“The positive outlook on both banks reflects the expectation that the relationship between the government and the bank will be close,” says Standard & Poor’s credit analyst Ping Chew. The authorities are reviewing draft legislation regarding the policy banks’ roles and regulatory framework.

“Any rating upgrade on the banks, to be in line with the ratings on the sovereign, will require a closer re-examination of the relationship between the government and the banks, and the support mechanisms to avoid default, especially timely financial backing,” adds Chew.