China financing guarantee companies (“FGCs”) mainly provide credit enhancement for corporates’ debt financing activities, including bond issuances, bank loans, and other forms of borrowing. FGCs backed by government-related shareholders still dominate the industry. We expect their overall credit risk profile to remain stable over the next 1-2 years amid local governments’ ongoing debt resolution efforts. However, given their strong regional focus, FGCs in less developed areas with strained fiscal revenues generally face higher compensation risks, while those in economically advanced regions benefit from lower credit loss claims, broader business opportunities, and stronger government support (e.g., capital injections), sustaining their better credit profiles.