S&P Global Ratings raised the long-term issuer credit ratings of China's CITIC Securities Co. Ltd. and its Hong Kong-based unit, CITIC Securities International Co. Ltd., to BBB+ from BBB.
The rating agency on Nov. 28 also affirmed the short-term issuer credit ratings of the companies at A-2. The outlooks on both entities are stable.
The upgrade on CITIC Securities' ratings is in line with S&P's view that the company's principal risk management is robust, as reflected in its good loss experience, financial performance and conservative investment strategy. The stable outlook reflects the expectation that the company will maintain its capital strength, prudent risk management and leading position in China's investment banking market.
S&P could lower the company's ratings if the latter raises its risk appetite, which may either weaken its risk position as indicated by a surge in credit losses, or undermine its capital strength as indicated by a decline in its risk-adjusted capital ratio to below 10%.
The agency noted that a rating upgrade is unlikely. However, it could raise the ratings if the company's stand-alone credit profile improves by two notches. This could happen if the company boosts its global market positioning, further diversifies its revenue base outside China and maintains a risk-adjusted capital ratio above 15%, while keeping losses below those of other securities companies.
S&P said the outlook and ratings of the Hong Kong-based unit are in line with those of the parent company. The unit could be downgraded if S&P sees signs that it is diverging from its parent's strategies or if its strategic importance to the parent decreases substantially.
S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.