Fitch Rates Azure Orbit II's MTN Programme Final 'A', USD Notes 'A'

Thu Apr 17, 2014 2:17am EDT

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(The following statement was released by the rating agency) HONG KONG, April 17 (Fitch) Fitch Ratings has assigned Azure Orbit II International Finance Limited's (Azure Orbit II) USD1bn Medium-Term Note (MTN) programme a final Long-Term Rating of 'A'. At the same time, Fitch has assigned Azure Orbit II's USD500m note issue a Long-Term Rating of 'A'. The notes are due in April 2019. KEY RATING DRIVERS - MTN Programme Guaranteed notes issued under the MTN programme will represent direct, general, unconditional and unsecured obligations of Bank of Communications Co., Ltd (BOCOM; A/Stable) by virtue of the deed of guarantee given by the bank's Macau Branch in favour of Azure Orbit II's MTN programme. Such obligations will rank pari passu with all other present and future unsecured obligations of the Macau Branch. The programme's rating reflects the ratings expected to be assigned to senior notes issued under the programme, and is in line with BOCOM's Long-Term Issuer Default Rating (IDR) of 'A'. BOCOM's IDR is in turn based on an extremely high probability of support, if required, from the Chinese government (A+/Stable). Senior notes under the MTN programme will represent direct, unconditional, unsubordinated and unsecured obligations of the issuer, while junior to senior obligations under the MTN programme will be rated on a case-by-case basis in accordance with published criteria and after taking into consideration individual terms and conditions of those notes. However, Fitch reserves the right not to rate certain instruments issued under the programme, such as market-linked instruments. The notes may be issued in any currency or of any tenor. The proceeds will be used for general corporate purposes by Bank of Communications Financial Leasing Co., Ltd (BOCOMM Leasing), a wholly owned subsidiary of BOCOM. Azure Orbit II is an offshore special purpose vehicle managed by BOCOMM Leasing. BOCOMM Leasing is strongly integrated with BOCOM and is a key subsidiary providing financial leasing services for the bank's customers. Fitch views the Macau Branch as part of the same legal entity and plays an important role in developing the bank's overseas businesses. KEY RATING DRIVERS - Senior Notes The notes are issued under the bank's USD1bn medium-term note (MTN) programme. The notes represent senior obligations of BOCOM, and are rated in line with BOCOM's Long-Term Issuer Default Rating (IDR) of 'A'. Furthermore, the notes will be unconditionally and irrevocably guaranteed by the Macau Branch. RATING SENSITIVITIES - MTN Programme, Senior Notes Any changes to ratings on the programme and the notes issued under the programme will be directly correlated to changes in BOCOM's IDR, which in turn will reflect any shift in the perceived willingness or ability of China's government to support BOCOM in a full and timely manner. Should the deed of guarantee given by Macau Branch no longer be effective, then the rating on the programme could be downgraded. The other ratings of BOCOM are unaffected by this action, and are as follows: Long-Term IDR: 'A'; Outlook Stable Short-Term IDR: 'F1' Support Rating: '1' Support Rating Floor: 'A' Viability Rating: 'bb-' Contact: Primary Analyst Jonathan Cornish Managing Director +852 2263 9901 Fitch (Hong Kong) Limited 2801, Tower Two, Lippo Centre 89 Queensway, Hong Kong Secondary Analyst Ivan Lin Associate Director +852 2263 9984 Committee Chairperson Tim Roche Senior Director +61 2 8256 0310 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. Additional information is available on www.fitchratings.com Applicable criteria, "Global Financial Institutions Rating Criteria", dated 31 January 2014 are available at www.fitchratings.com. Applicable Criteria and Related Research: Global Financial Institutions Rating Criteria here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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