China News Agency, Shanghai, September 14 (Reporter Jiang Yu) Moody's Investor Service released an analysis report on the 14th, saying that the leverage ratio of Chinese state-owned enterprises under its assessment will improve in 2021, and debt growth will remain moderate.
According to Moody's analysis, under the impact of the new crown pneumonia epidemic, in 2020, the overall leverage ratio of the state-owned enterprises evaluated by the adjusted debt/EBITDA (earnings before tax, interest, depreciation and amortization) ratio will increase by about 0.6 times due to the decline in EBITDA. In addition, debt growth to meet capital expenditure and investment needs also contributes to its overall debt growth.
In 2021, thanks to the expected increase in EBITDA brought about by the rebound in GDP and the slowdown in debt growth, the leverage ratio of state-owned enterprises under evaluation will still be higher than that of previous years, but will drop by about 0.2 times.
Moody's predicts that the leverage ratio of various industries in China varies, and the leverage and debt of state-owned enterprises that undertake more public policy projects will grow faster, including transportation, electricity and gas, and construction.
It is expected that the profitability of state-owned enterprises in the chemical industry will increase in 2021, and some enterprises will undergo restructuring, so the leverage will improve the most.
In addition, central SOEs face stricter supervision and stronger market positions, so EBITDA is more stable and leverage is more stable.
Despite the increase in leverage, Moody's expects that the debt growth of state-owned enterprises will be more moderate due to more prudent capital expenditures, lack of attractive investment opportunities and the Chinese government's deleveraging policy guidelines.
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