Gloomy outlook

China's credit outlook is souring, according to Moody's Investors Service.

Why it matters: The health of the world's second-largest economy is showing cracks after decades of rapid growth, Nathan writes.

Driving the news: The ratings agency lowered its outlook on China's government credit ratings from stable to negative.

• The long-term rating on the country's sovereign bonds remains for now at A1, which is four levels below AAA.
• Concerns include mounting local government debt, "weaker demographics," economic growth concerns and a property crisis, Moody's said.

Yes, but: Moody's noted that China retains "high shock-absorption capacity" — meaning it can use its vast resources to make some of its pain go away.

• "And while growth will be lower than previously expected, it will remain robust compared with other A-rated peers," Moody's said.