Fitch Ratings affirmed Tencent Holdings' (HKG:0700) A+ long-term foreign and local currency issuer default ratings and senior unsecured rating, as well as the A+ rating on its outstanding senior unsecured note and global medium-term note program.

In a Friday release, Fitch said it maintains its view that the company will retain its strong operations amid modest EBITDA growth, solid profit margins and steady free cash flow.

The company will also retain frugal capital management, a steady EBITDA gross leverage ratio and a healthy net cash balance.

The rating's negative outlook is in line with China's sovereign outlook, with changes in the sovereign's rating or outlook also leading to equivalent changes for the company.

Fitch expects any shift in the regulation of variable interest entities (VIEs) within China's internet sector to materially impact Tencent's credit profile since the company does not own its VIEs.

Some other factors that could lead to a downgrade for Tencent include signs of increased state intervention, a major market share loss, notable merger and acquisition moves, and sustained drops in operating cash flow.

Price (HKD): $421.00, Change: $-9.8, Percent Change: -2.27%