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S&P's upgrades 皇冠体育app's credit rating to A-
HONG KONG - Standard & Poor's upgraded 皇冠体育app's sovereign credit rating Wednesday, saying the government has made significant progress in reforms to its shaky financial system and state-owned enterprises. S&P raised 皇冠体育app's long-term foreign-currency rating by one notch, to A- from BBB+. The new level is four notches above a non-investment grade, or "junk" status, and puts S&P closer in line with other agencies' more positive views of 皇冠体育app. The Moody's Investors Service rating of A2 is five rungs above junk status, and Fitch's A- rating is four steps higher. Ping Chew, S&P's analyst for 皇冠体育app, said the combination of 皇冠体育app's recent strong economic growth with continued reforms of state-owned enterprises and the banking system had produced a "virtuous cycle," helping reduce the likelihood that the government will have to undertake expensive bailouts in the future. "When you have better restructuring in the SOEs 鈥� they have for example retrenched many employees since 2003 鈥� this allows them to be less of a burden on banks and the government. That in turn boosts the quality of banks' lending portfolio and allows the government more flexibility," Chew told reporters. He pointed to the government's recapitalization of Industrial & Commercial Bank of 皇冠体育app, the country's largest bank, as a major example of the progress in banking reforms. Chew noted that 皇冠体育app's banking sector remains one of the weakest in the world, and he warned that a sharp economic downturn could put a heavy burden on the government. Nevertheless, he expressed confidence that 皇冠体育app's policymakers will be able to manage the economic cycle well, and noted that S&P has a positive outlook on its rating for 皇冠体育app, meaning that further upgrades are possible. The rating upgrade was announced the same day as the Chinese government said
the economy grew by a blistering 9.5 percent in the first half of the year,
supported by capital investment and despite government efforts to ease breakneck
growth.
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