TEXT-S&P Rates China Taiping's Proposed Sr. Unsecured Notes 'BBB-'
(The following was released by the rating agency)
SINGAPORE (Standard & Poor's) Nov. 8, 2012--Standard & Poor's Ratings Services today assigned its 'BBB-' issue rating to a proposed issue of senior unsecured notes that China Taiping Insurance Holdings Co. Ltd. (CTIH: BBB-/Stable/A-3; cnA-/cnA-2) unconditionally and irrevocably guarantees. At the same time, Standard & Poor's assigned its 'cnA-' Greater China regional scale rating to the proposed 10-year notes. China Taiping Capital Ltd., a special purpose vehicle and wholly owned subsidiary of CTIH, will issue the notes. The rating on the notes is subject to our review of the final issuance documentation.
The rating on the notes is at the same level as the long-term foreign currency counterparty credit rating on CTIH, the guarantor of the notes. The notes rank equally with all other unsecured and senior obligations of CTIH. We expect the company to use the notes proceeds to repay other senior debts and for working capital purposes.
The ratings on CTIH reflect the combined credit profiles of the China Taiping Insurance group's major operating entities and subordination notching due to the company's status as an insurance holding company. CTIH's diverse businesses in China and Hong Kong, its strong growth prospects in China, and its adequate and improving capitalization and earnings support the rating. The company's capital needs, which partly stem from the strong growth of its subsidiaries in China, offset these strengths.
We expect the potential increase in CTIH's ratio of debt to total equity plus debt after the notes issuance to be within our tolerance of 35%-45% for the rating category. The ratio was 37.1% as of June 30, 2012. In addition, we believe the ratio will gradually fall back to close to its pre-issuance level or lower over the next 12 months.
RELATED CRITERIA AND RESEARCH
-- Refined Methodology And Assumptions For Analyzing Insurer Capital Adequacy Using The Risk-Based Insurance Capital Model, June 7, 2010
-- Holding Company Analysis, June 11, 2009
-- Interactive Ratings Methodology, April 22, 2009
-- Flexible Gapping Of Ratings Reflects Regional Variations In Structural Subordination As Well As Differing Debt-Servicing Capacities, May 25, 2005
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