SHANGHAI, May 24 (Reuters) - Moody’s Investors Services has no specific timetable for re-visiting China’s rating after its downgrade on Wednesday, but would monitor conditions on a regular basis, said Marie Diron, associate managing director of Moody’s Sovereign Risk Group.
The risks to China’s financial system were “broadly balanced”, she told Reuters, after the ratings agency downgraded the country’s long-term local and foreign currency issuer ratings by one notch to A1 from Aa3.
The rating would come under negative pressure if leverage in China was seen to be increasing faster expected, creating tensions in the financial sector, she said.
Conversely, if deleveraging reforms are more effective than expected that would put positive pressure on the rating, she said.
On the policy front, Moody’s would be watching how measures play out relating to state-owned enterprise reform, removal of excess capacity, mixed corporate ownership, and tightening conditions in the shadow banking sector, she said. (Reporting by John Ruwitch; Editing by Kim Coghill)