Moody’s Investors Service on Monday downgraded from stable to negative its outlook for the MTR Corporation Limited, MTR Corporation (C.I.) Limited, and Kowloon-Canton Railway Corporation.
The rating action follows Moody’s similar downgrading on March 12 of its outlook for the Hong Kong SAR Government.
In a notice to investors Moody’s said that “We consider that the ratings of MTRC and KCRC, which incorporate a very high level of support and uplift from the Hong Kong government, could be impacted by the potential for lower rating of the Hong Kong sovereign rating over the medium term.”
The notice also reiterated that the decision on the Hong Kong government’s rating reflected “the tight linkage between the credit profiles of the Special Administrative Region and China. That linkage manifests itself in the economy, given the very strong trade links between the two; in the financial system, given Hong Kong’s banking system’s involvement in the Mainland; and ultimately in the political and institutional arena, given the tensions inherent in the ‘One Country, Two Systems’ policy.”
A government spokesman said on Saturday that Moody’s comments on political risks were “all purely speculative and subjective statements without any ground.”