Ratings agency Moody’s slapped a downgrade warning on China’s credit rating on Tuesday, saying costs to bail out local governments and state firms and control its property crisis would weigh on the world’s No. 2 economy.

Moody’s lowered the outlook on China’s A1 debt rating to “negative” from “stable” less than a month after it had done the same to the United States’ last remaining triple-A grade from a credit-rating agency.

Historically, about one-third of issuers have been downgraded within 18 months of the assignment of a negative rating outlook.

Beijing likely needs to provide more support for debt-laden local governments and state firms which pose “broad downside risks to China’s fiscal, economic and institutional strength,” it added.

Source: Nikkei Asia