Fitch says Wuhan local entity ratings unaffected

Fitch Rating expects the coronavirus outbreak will not affect the ratings of Wuhan's government-related entities immediately.

The GRE ratings, based on the group's rating criteria using a through-the-cycle approach, have high support scores of between 30 and 50,reflecting that the Wuhan municipality has a strong incentive to provide extraordinary support to them.

The agency expects the economy to slow in the first quarter and rebound in the second half of the year once the virus epidemic is contained.

However, government support for the three GREs should remain strong. Softer economic activity in Wuhan may affect the GREs' standalone credit profiles, but this will be mitigated by government support for GREs such as support from central authorities.

Meanwhile, the epidemic will not increase the default rate of the mainland's city investment enterprises. Many city investment enterprises issued coronavirus bonds to joined in infrastructure projects such as  hospitals, while the supply of loans for city investment enterprises declinde under government policies to attract investors to subscribe.