(Reuters) -Hours before Moody's (NYSE:MCO) downgraded the outlook for China's sovereign credit ratings on Tuesday, speculation that such a move was imminent was circulating on Chinese social media platform WeChat, a Reuters review shows.
"It is said that Moody's will downgrade China's sovereign credit rating, and an announcement will be made in the afternoon," according to one WeChat post in Chinese translated by Reuters, in a chat group with several hundred people.
Moody's on Tuesday cut China's government outlook to negative from stable, stopping short of an outright downgrade. The rating agency cited growing evidence that authorities will have to step in to support debt-laden local governments and state firms, a move that could pose risks to the country's fiscal, economic and institutional strength.
China's blue-chip stocks slumped to nearly five-year lows on Tuesday amid worries about the country's growth, with talk of a possible cut by Moody's denting sentiment during the session, ahead of the release.
A Moody's spokesperson declined to comment.
Credit ratings actions by agencies such as Moody's, S&P Global and Fitch have sometimes been reported ahead of their scheduled release.
In 2011, the decision of S&P Global to place the credit ratings of 15 eurozone countries, including Germany, France, and Austria, on a review for downgrade was published ahead of its release by the Financial Times.
Ratings leaks are quite common but can be difficult to pin down since they can come from different sources, said Alexander Michaelides, professor of finance at Imperial College London, who has researched and published academic papers on the systematic leakage ahead of official sovereign debt rating announcements.
"It is quite common, but it is difficult to show that it has happened. And it happens in many countries around the world – even in countries with very high institutional quality," Michaelides said.