Huarong Asset Management, China’s biggest distressed debt investor, has suffered its first credit rating downgrade by an international agency weeks into a brutal sell-off in the under-pressure group’s bonds.

The company, which is majority-owned by China’s finance ministry and owes about $22bn of dollar-denominated debt, has come under intense scrutiny as it has repeatedly delayed the publication of its 2020 financial results.

Fitch Ratings late on Monday downgraded Huarong’s issuer rating from A to triple B, its lowest investment grade category. The agency said it “believes the government sponsor’s indication of support has not been as forthcoming” a day after Huarong, which has assets of about Rmb1.7tn ($262bn), confirmed that it would miss a second reporting deadline at the end of April.

Uncertainty over Huarong’s financial health has also been heightened by the execution of its former chair, Lai Xiaomin, in January for crimes that included bigamy and abuse of power to allocate credit.

The results delay, alongside reports of a potential restructuring, has sparked sharp falls in Huarong’s bond prices and forced investors to reassess the likelihood of government support for the business and for other state-linked Chinese issuers on international debt markets.

Huarong has said the reporting delay was needed so that it could complete a transaction, without specifying details. That explanation raised concerns over the quality of its assets and the business activities of former chair Lai.

Huarong’s stock has been suspended in Hong Kong since the start of April and trading in its bonds has been volatile. On Tuesday, a Huarong bond maturing in 2022 was trading at 85 cents on the dollar, above the lows of 67 cents in mid-April.

The company has become a focal point for broader discussions of Beijing’s support for its companies in offshore bond markets, as well as the health of China’s financial system. Brad Tank, chief investment officer for fixed income at Neuberger Berman, said in a note that the government was likely to “engineer a soft landing”.

“As such a huge owner of distressed assets at the heart of an economy that is likely to experience a rise in non-performing loans over the coming months, we think Huarong’s policy significance is too high for the government to allow any doubt about its stability,” he added.

Huarong is one of four bad debt managers formed as part of a clean-up of China’s banking system following the Asian financial crisis of the 1990s. It has since evolved into a sprawling financial conglomerate with a range of subsidiaries.

Other western rating agencies have issued warnings over Huarong in recent weeks, but had stopped short of a downgrade.

This month, China Chengxin Credit changed Huarong’s outlook to “negative”, citing concerns over declining profitability and high debt levels, but retained a triple A rating for the company.