)
Debt levels at China's 200 biggest companies increased by five times between 2007 and 2013 and financial pressures on them will likely intensify as the economy continues to cool, Standard & Poor's said.
An economic slowdown will make it harder for China to revive the borrowers as some projects they did with help of a past huge stimulus programme were not commercially viable, it added.
S&P, which surveyed the 200 biggest corporations by revenue and bond issuance, said financial risks for many companies will likely intensify as China's economy slows.
The most vulnerable to a sharp downturn are asset-heavy ones and capital-intensive sectors, it said.
The survey accounted for 20% of the non-financial corporate debt in the world's second largest economy at the end of 2013, equivalent to 30% of GDP. Companies were in 18 industries.
Also Read
"The baseline assumption is that the next 12 months could see an acceleration of corporate stress. The deteriorating trend is still there in almost all industries," Christopher Lee, S&P credit analyst and co-author of the report, told Reuters.
He said companies in metals and mining, engineering/construction and transport are "far weaker" than a 2013 study showed.
In November 2008, during the global financial crisis, China announced a massive 4 trillion yuan ($586 billion) stimulus programme to keep the economy growing.
MOUNTAIN OF DEBT
S&P said, without giving figures, that net debt at the 200 companies in 2013 was five times higher than in 2007.
Economists say the mountain of debt left by China's huge stimulus package is keeping Beijing from taking similar easing measures now to boost the slowing economy.
S&P said sectors which raised their borrowings the most also had the weakest profitability and financial strength. It singled out railways, metals and mining, utilities, real estate and building materials.
Higher borrowings had not translated into higher profitability with the stimulus having only a short-term effect of lifting revenue and earnings in 2010, S&P said.
The ratings agency expects China's GDP growth to slow to around 7.1% in 2015 but in one scenario could be about 6% - which it said could drop the credit profiles of capital goods, real estate, building materials companies by one notch.
Firms in mining, transport, engineering and construction could see their credit profiles fall one to two notches, it added.
