RPT-Fitch Rates China Huarong Asset Management's USD Notes Final 'A'
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July 15 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has assigned China Huarong Asset Management Co., Ltd's (China Huarong; A/Stable) USD1.2bn 4% senior unsecured notes due 2019 and USD300m 3% senior unsecured notes due 2017 final ratings of 'A'. The proceeds will be used as working capital and for general corporate purposes.
The assignment of the final ratings follows the receipt of documents conforming to information already received. The final ratings are in line with the expected ratings assigned on 4 July 2014.
KEY RATING DRIVERS - US Dollar Senior Unsecured Notes
The notes, to be issued by Huarong Finance Co., Ltd., are to be unconditionally and irrevocably guaranteed by Huarong (HK) International Holdings Limited (Huarong Hong Kong), a wholly owned subsidiary of China Huarong.
In place of a guarantee, China Huarong has granted a keepwell deed and a deed of equity interest purchase, investment and liquidity support undertaking to ensure that the guarantor, Huarong Hong Kong, has sufficient assets and liquidity to meet its obligations under the guarantee for the US dollar notes.
The notes are rated at the same level as China Huarong's Issuer Default Rating (IDR), given the strong link between Huarong Hong Kong and China Huarong and the keepwell deed and the deed of equity interest purchase, investment and liquidity support undertaking, which provide additional support and transfer the ultimate responsibility of payment to China Huarong.
In Fitch's opinion, both the keepwell deed and the deed of equity interest purchase, investment and liquidity support undertaking signal a strong intention from China Huarong to ensure that Huarong Hong Kong has sufficient funds to honour the proposed debt obligations. The agency also believes China Huarong intends to maintain its reputation and credit profile in the international offshore market, and is unlikely to default on offshore obligations.
Additionally a default of Huarong Hong Kong could have significant negative repercussions on China Huarong for any future offshore funding.
China Huarong was established in 1999 and is one of four big asset management companies approved and set up by the State Council to safeguard the country's economic and financial stability
RATING SENSITIVITIES - US Dollar Senior Unsecured Notes
Any rating action on China Huarong's IDR would result in similar rating action on the rated notes.