S&P Global Ratings and Moody's assigned issuer ratings to China-based Huatai Securities Co. Ltd., with a stable outlook.
S&P assigned BBB long-term and A-2 short-term issuer credit ratings to Huatai Securities, while Moody's assigned Baa2 long-term and Prime-2 short-term issuer ratings to the company. According to the rating agencies, Huatai Securities' ratings reflect the likelihood of financial support for the company from the Chinese government should the need arise.
Huatai Securities' top-tier position in China's stock brokerage and margin financing sectors, its prudent risk management and adequate-high liquidity support S&P's assessment of its stand-alone credit profile. It expects the company's capital, leverage and earnings to be strong and its risk-adjusted capital to remain at 10% to 15% over the next two years.
S&P said Huatai Securities' proposed private placement of approximately 26 billion yuan could increase its risk-adjusted capital ratio by around 400 basis points.
Meanwhile, Moody's said the company's Ba1 stand-alone assessment reflects its strong brokerage franchise, satisfactory profitability metrics and low leverage when compared with global peers. The credit strengths are offset by risks arising from the company's overseas acquisition and its investments in equities subject to selling restrictions and illiquid asset management schemes.
As of May 31, US$1 was equivalent to 6.41 Chinese yuan.
This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings, a separately managed division of S&P Global. Descriptions in this news article were not prepared by S&P Global Ratings. The original S&P Global Ratings documents referred to in this news brief can be found here.
