Moody's sees positive outlook on three Chinese policy banks

Moody's upgraded the long-term ratings of three big policy banks in China to Aa3 from A1.

The three banks are China Development Bank, Export-Import Bank of China, and Agricultural Development Bank of China.

China Development Bank’s  long-term foreign currency senior unsecured debt rating was upgraded to Aa3 from A1. While Export-Import Bank of China’s long-term domestic and foreign currency senior unsecured debt ratings was upgraded to Aa3 from A1. On the other hand, Agricultural Development Bank of China’s long-term foreign currency was also issuer rating upgraded to Aa3 from A1.

The action follows Moody's decision to upgrade China's long-term foreign currency sovereign rating to Aa3 with a positive outlook from A1.

The banks' baseline credit assessments are also changed to 4 from 5, on a scale of 1 to 21, where 1 represents lowest credit risk.

The action reflects Moody's view that the banks will continue to receive full support from the government as 100 per cent state-owned banks.

Although the government has begun to initiate reforms to operate the banks more based on commercial interest, state ownership in these entities is not expected to change during Moody's rating horizon.