(The following was released by the rating agency)
HONG KONG (Standard & Poor's) Oct. 8, 2012--Standard &
Poor's Ratings Services today assigned its 'B' issue rating to a
proposed issue of U.S. dollar-denominated senior unsecured notes
by China Tianrui Group Cement Co. Ltd. (B+/Stable/--; cnBB/--).
At the same time, we assigned our 'cnBB-' Greater China regional
scale rating to the proposed notes. The rating on the notes is
subject to our review of the final documentation for the notes
The proposed issue is rated one notch lower than the
corporate credit rating on Tianrui because of priority
liabilities at its operating company in China. Tianrui will use
the proceeds from the proposed notes to refinance debt and for
general corporate purpose.
The proposed issuance does not affect the rating on Tianrui.
The company's financial performance in the first half of 2012
was in line with our expectation, with an operating margin of
about 20%. We expect the operating margin to stay above 20% in
the next 12 months as large national infrastructure projects,
such as the South-North Water Transfer Project, fuel demand.
The rating on Tianrui reflects the company's untested
corporate governance, short track record, heavy reliance upon
short-term debt to support its capital structure, and aggressive
growth plans. We also note that Tianrui operates in a
competitive, cyclical, and capital-intensive industry, which we
believe is in a weak cycle. The company's operating scale,
reasonable geographic diversification, and relatively efficient
operations due to vertical integration temper the weaknesses.
(For details, see our summary analysis published Oct. 8, 2012,
on RatingsDirect on the Global Credit Portal.)
RELATED CRITERIA AND RESEARCH
-- Summary Analysis: China Tianrui Group Cement Co. Ltd.,
Oct. 8, 2012
-- Methodology And Assumptions: Liquidity Descriptors For
Global Corporate Issuers, Sept. 28, 2011
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Global Building Products And Materials Industry, Nov. 10, 2008
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