Moody's downgrades ratings of 17 Chinese govt financing vehicles to 'negative'

On Thursday, Moody's downgraded the ratings of 17 Chinese local government financing vehicles (LGFVs) by one notch and promptly placed them back on another downgrade warning by setting a "negative" outlook to their ratings.China's local governments, with an estimated debt exceeding $9 trillion, have faced financial challenges in recent years due to the impact of the country's property market crash, which has significantly reduced their revenue from land sales.Moody's had put the 17 LGFV ratings on review for a downgrade in early December when it put China's sovereign rating on a "negative outlook". Thursday's move saw them all cut by one notch.The renewed negative outlooks reflect "a potential weakening in the governmental capacity to support score of their respective regional and local government owners, given the negative outlook on China's sovereign rating," Moody's said.It left the ratings of nine other Chinese LGFVs unchanged but cut their outlooks to negative due to the same pressures. The International Monetary Fund has estimated $9.1 trillion in total debt is held by China's LGFVs, which cities use to raise money for infrastructure projects critical to the development.With inputs from Reuters.