Chinese Investors Scrutinize Bond Portfolios Amid AAA Ratings Review

More than a quarter of China’s nearly 6,000 bond issuers had AAA ratings at the end of the first quarter, with an additional 32% rated AA+. In contrast, less than 1% of outstanding US corporate bonds hold AAA ratings. This scrutiny comes as domestic investors in China are reassessing their bond holdings for potential downgrade risks following regulatory tightening of the country’s AAA-rated issuers. Around a dozen institutions, including mutual funds and banks, are evaluating whether issuers in their portfolios are susceptible to credit rating downgrades or withdrawals. Some may reduce exposure if ratings are lowered after completing their analysis….