Standard and Poor’s has cut its long-term rating on Hong Kong, following its cut to China’s sovereign credit rating , to reflect “spillover risks” to the territory.
S&P lowered its long-term rating on Hong Kong to AA+ from AAA after it cut its credit rating on China. The ratings agency cited rising economic and financial risks in China following a prolonged period of strong credit growth as reasons for it cutting its rating on the world’s second-largest economy.
Strong institutional and political ties exist between China and Hong Kong, arising from the latter’s status as a Special Administrative Region of China. Consequently, we view a weakening of credit support for China as exerting a negative impact on the ratings on Hong Kong beyond what is implied by the territory’s currently strong credit metrics.