Standard & Poor’s (S&P) raised Hong Kong’s long-term credit rating to its highest “AAA” rating from “AA+” yesterday, applauding the Chinese territory’s financial management and growth prospects, but the debt ratings agency — which also upgraded China’s long-term debt rating to “AA-” from “A+” earlier yesterday — warned that Hong Kong faces risks stemming from its continuing economic integration with China.
“We believe that the upgrade of China and Hong Kong’s excellent credit metrics support [the territory’s] creditworthiness at the highest rating level of ‘AAA,’” S&P credit analyst Kim Eng Tan (陳錦榮) said in a statement. “Few governments weathered the global economic downturn better than Hong Kong.”
Hong Kong, an export-driven financial hub which maintains semi-autonomous status in China, has healthy fiscal reserves and “above-average growth potential for a high-income economy,” the ratings agency said.
“Strong growth in mainland China and deepening economic and financial links have boosted Hong Kong’s economic growth prospects,” it said. “The main credit weaknesses are Hong Kong’s reliance on volatile revenue sources and the potential risks associated with weaker institutions in lower-rated China.”
S&P said China’s long-term ratings were stable and its “AA-” ratings reflect Beijing’s low debt level, strong asset sheet and “exceptional growth prospects.”
The international agency said those strengths outweighed the potential for liabilities in the banking system if there were an extended economic slowdown.