Moody’s affiliate responds to reports of lay-offs and office closures in Beijing, Shanghai and Shenzhen by vowing to maintain ‘strong presence in China’

The lay-offs come as China’s economy struggles to cope with Beijing’s strict Covid-19 policies and a property market in turmoil. Chinese home builders accounted for more than half of Asia’s high-yield corporate bond issuers before a record number of defaults in 2022, and were major clients of international rating agencies such as Moody’s in the region.

China’s property market has been in crisis since mid last year, with private developers such as China Evergrande Group and state-backed firms such as CIFI Holdings struggling for cash flow and to reduce debt. Beijing’s “three red lines” policy, introduced to stem systemic risk, has forced developers to default on more than US$20 billion in offshore debt.

Moody’s had been acquiring risk management firms and consulting companies, including San Francisco-based KMV and assets of the software products group of Crowe, Chizek and Company since 2000, and established Moody’s Analytics as a separate and independent entity in 2008.

The unit, which provides decision solutions, research and insights, and data and information services, generated US$2.06 billion in revenue globally in the first nine months of 2022, 18 per cent more than the same period last year.

Moody’s Investors Service, the main business, US$2.25 billion in the first three quarters of this year, a year-on-year decline of 27 per cent. Moody’s rating business in China has not been impacted and will continue to operate as usual, Bloomberg said.

The firm did not provide further information about compensation or working solutions for other mainland Chinese staff following the office closures.