China’s plan to abolish the Ministry of Railways while continuing its support for the industry is positive for the nation’s banks, according to Moody’s Investors Service.
Chinese lenders hold a “large” portion of the 759 billion yuan ($122 billion) of bonds issued by the ministry, with total liabilities from the government body reaching 1.3 trillion yuan, or 2 percent of the nation’s loans, the ratings company said in a Credit Outlook report.
China will transfer rail regulatory functions to the Ministry of Transportation, the State Council said last week in a statement. Commercial operations and liabilities will go to the newly established China Railway Corp., a state-owned enterprise that will receive government backing for its debt as the ministry did, according to the statement.
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