(The following was released by the rating agency)
BEIJING/HONG KONG, November 02 (Fitch) Fitch Ratings has
assigned China Construction Bank Corporation (CCB) Long- and
Short-Term Local-Currency Issuer Default Ratings (IDR) of 'A'
with Stable Outlook and 'F1', respectively.
The agency has also assigned an expected Long-Term
local-currency rating of 'A(EXP)' to the CNY-denominated senior
medium-term bond (MTB) issued through CCBL Funding PLC in London
and guaranteed by CCB. The assignment of the final rating of the
MTB issue is subject to final documentation conforming to that
already received by Fitch. A full list of ratings is provided
CCB's Long-Term Local-Currency IDR is equalised with its
Foreign-Currency IDR of 'A', both of which are driven by high
expectations of state support in the event of stress. Fitch's
view of support is based on CCB's systemic importance, its 57%
ownership by the state and long track record of state support
for the bank. CCB is China's second-largest bank with total
assets of CNY13trn (USD2trn) and a deposit market share of 12%
as of end-Q312. Any changes in the perceived ability or
willingness of the state to continue supporting the bank could
lead to a change in the bank's IDRs and instrument ratings.
The issue rating is derived directly from CCB's own
Long-term Local-Currency IDR to reflect the full guarantee from
CCB. CCBL Funding PLC is a wholly-owned special purpose vehicle
(SPV) subsidiary of CCB (London) Limited. The SPV was
established in 2012 solely to facilitate CNY bond issuance in
London. The issue is capped at CNY2.5bn. All funds raised will
be used to develop CCB's offshore CNY business and for other
general corporate purposes.
The unconditional and irrevocable guarantee provided by CCB
constitutes a direct, senior, unsecured obligation of the parent
bank. Any event that would make enforcement of the deed of
guarantee questionable would trigger a review, and could lead to
a change in the issue's rating. Any shift in CCB's Long-Term
Local-Currency IDR could also result in a change in the issue's
The Local and Foreign Currency IDRs of entities whose
ratings are underpinned by expectations of state support
typically are differentiated when they operate in a country
whose sovereign Local and Foreign Currency IDRs differ. However,
in the case of China's state-owned banks, Fitch believes that
equalisation of the IDRs is appropriate, given the strength of
the sovereign's balance sheet in foreign currency, and that such
reserves may be utilised for the purpose of extending any
required support to the banks, whose liabilities tend to be
denominated mostly in local currency. Furthermore, given China's
capital controls, cross-border flows of local currency funds may
also require pre-approval by state authorities, thereby
indicating little differentiation between local- and
foreign-currency, and on- and off-balance-sheet liabilities.
Newly assigned ratings of CCB are as follows:
- Long-Term Local Currency IDR assigned at 'A', Stable
- Short-Term Local Currency IDR assigned at 'F1' CNY
Medium-Term Bonds issued by CCBL Funding PLC:
- Long-term Local Currency Rating assigned at 'A (EXP)'
The existing ratings of CCB are as follows:
- Long-Term Foreign-Currency IDR at 'A'; Stable Outlook
- Short-Term Foreign-Currency IDR at 'F1'
- Support Rating at '1'
- Support Rating Floor at 'A'
- Viability Rating at 'bb'