TEXT: Fitch Rates CNPC's USD bonds 'A+(exp)'

Wed Apr 11, 2012 10:22pm EDT

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(The following was released by the rating agency)

BEIJING/SINGAPORE, April 11 (Fitch) Fitch Ratings has assigned CNPC General Capital Limited, BVI's proposed USD guaranteed senior notes due 2017 and 2022 expected ratings of 'A+(exp)'.

The notes will be irrevocably and unconditionally guaranteed by CNPC Finance (HK) Limited (CPFHK) ('A+'/Stable), a wholly owned subsidiary of China Petroleum Finance Limited. The latter is 51%-owned by China National Petroleum Corporation (CNPC; 'A+'/Stable) and 49%-owned by PetroChina Limited (PetroChina) ('A+'/Stable), which is itself 86.51%-owned by CNPC.

The expected rating is based on information provided to Fitch by CNPC as at the date of the rating assignment. The final rating is contingent upon receipt of final documents conforming to information already received.

China Petroleum Finance Limited (CPF) and CPFHK together function as the sole treasury centre for the CNPC group, centralising settlements, debt financing and cash management. CNPC appoints all CPF's and CPFHK's senior management members and CPF's board exclusively comprises senior management of CNPC and PetroChina. CPF's consolidated budget and business plans are approved by CNPC.

The notes will be governed by substantially the same terms as the notes issued by CNPC (HK) Overseas Capital Limited in April 2011, under which, for the benefit of the note holders, CNPC and CPF executed keepwell agreements with CPFHK. These keepwell agreements, while not guarantees, are considered to be beneficial to note holders, by ensuring that CPF and CPFHK have sufficient resources to meet their financial obligations. However, in Fitch's view, equalising CPFHK's rating with CNPC's is not primarily dependent on these agreements but based on the overall assessment of legal, operational and strategic ties (see the rating report China National Petroleum Corporation dated 14 April 2011 for more details).

Fitch on 5 April 2012 affirmed CNPC's, CPFHK's and PetroChina's 'A+' Long-Term Foreign-Currency Issuer Default Ratings (LTFC IDRs) with Stable Outlook and 'AA-' Long-Term Local-Currency (LTLC) IDRs with Negative Outlook (see rating action commentary on www.fitchratings.com).

CNPC's ratings are capped at China's Long-Term Foreign and Local Currency IDR of 'A+' (Stable) and 'AA-' (Negative), reflecting government ownership of the company. Any change to China's sovereign IDRs will lead to a corresponding change to the IDRs of CNPC and CPFHK.

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