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June 27 (The following statement was released by the rating agency)
Fitch Ratings has assigned Beijing Infrastructure Investment's (BII; A+/Stable) USD2bn medium-term note (MTN) programme a final Long-Term Rating of 'A+'. At the same time, Fitch has assigned the CNY1.2bn 3.75% senior unsecured notes issued under the programme a final rating of 'A+'. The notes are due in 2017 and the company plans to use the proceeds primarily for the development of the urban railway transit system in Beijing, as working capital and for general corporate purposes.
The assignment of the final ratings on the MTN programme and yuan denominated notes follows the receipt of documents conforming to information already received. The final ratings are in line with the expected rating assigned on 16 June 2014.
KEY RATING DRIVERS - MTN Programme and Yuan Senior Unsecured Notes
The notes under the MTN programme will be issued by Eastern Creation II Investment Holdings Ltd, and are unconditionally and irrevocably guaranteed by Beijing Infrastructure Investment (Hong Kong) Limited (BII HK), a wholly owned subsidiary of BII. The notes under the MTN programme will be senior unsecured obligations of BII HK and also rank pari passu with all other obligations of BII HK.
In place of a guarantee, BII has granted a keepwell and liquidity support deed and a deed of equity interest purchase undertaking to ensure that BII HK has sufficient assets and liquidity to meet its obligations under the guarantee for the notes under the MTN programme.
The notes under the MTN programme are rated at the same level as BII's IDR, given the strong link between BII HK and BII and because the keepwell and liquidity support deed and deed of equity interest purchase undertaking transfer the ultimate responsibility of payment to BII.
In Fitch's opinion, both the keepwell and liquidity support deed and the deed of equity interest purchase undertaking signal a strong intention from BII to ensure that BII HK has sufficient funds to honour the debt obligations. The agency also believes BII intends to maintain its reputation and credit profile in the international offshore market, and is unlikely to default on its offshore obligations. Additionally, a default by BII HK could have significant negative repercussions on BII for any future offshore funding.
Fitch's rating on the MTN programme is for the programme in general and individual issues under it may not be assigned the same rating as the programme's.
RATING SENSITIVITIES - MTN Programme and Yuan Senior Unsecured Notes
Any rating action on BII's IDR would result in similar rating actions on the MTN programme and the rated notes under the MTN programme.