Credit rating agency Fitch Ratings has placed Chinese Internet company Baidu, Inc.'s long-term foreign and local-currency debt, currently rated A, on negative watch due to higher financial risks associated with the company's fast-growing financial services unit.
Fitch says that the rapid growth of Baidu's wholly owned Financial Services Group (FSG) has increased Baidu's overall business risk. The risk profile of the financial services business is significantly higher than Baidu's core internet services, such as search services, online video and transaction services.
Like most of its peers, Baidu's FSG sells wealth management products (WMPs), which are mostly fixed-income products with a short tenure of up to 12 months. As with Chinese banks, Baidu does not need to set aside large amounts of capital against potential defaults on its WMPs. Bai...
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