Moody's Cuts Outlook for 8 Chinese Banks to Negative from Stable

Moody's lowered its forecasts for eight Chinese banks to negative from stable, a day after revealing a bearish stance on the country's sovereign bonds due to debt level concerns.

The rating, which included the Industrial and Commercial Bank of China and China Development Bank, was primarily driven by the change in outlook to negative from stable on the government's credit ratings, according to a statement issued by Moody's on Wednesday.

China has sought to defend its debt position, with the central bank increasing its support for the yuan and state media publishing a series of articles praising the economy. 

On Wednesday, Moody's also lowered its forecasts for Hong Kong and Macau and put 26 Chinese local government financing instruments under review for downgrades. The banks that the agency changed from negative to stable include three sovereign banks and five large state-owned commercial banks.

“Moody's expects support for financially stressed entities to be more selective, contributing to long-term risks of further pressure on state-owned enterprises and regional and local governments,” the statement said.

Moody's tower in New York