(The following was released by the rating agency)
HONG KONG (Standard & Poor's) Oct. 8, 2012--Standard &
Poor's Ratings Services today assigned its 'BB+' rating to an
upsized US$4.5 billion medium-term notes program of CITIC
Pacific Ltd. (BB+/Negative/--; cnBBB/--). The original size of
the program was US$2.0 billion. At the same time, we assigned
our 'BB+' issue rating to a proposed benchmark size senior
unsecured notes issuance under this program. We have also
assigned our 'cnBBB' Greater China regional scale rating to both
the program and the proposed notes. We expect CITIC Pacific to
use the proceeds from the proposed notes to refinance borrowings
due in 2013.
We anticipate that the company's debt will increase by the
end of 2012, with its ratio of total debt to total capital
reaching close to 60% as it pre-finances debt maturities in
2013. In our view, the key risk to the rating on CITIC Pacific
remains the execution of the construction of the Sino Iron
project in Western Australia and whether the company can start
the first production line soon.
The rating on CITIC Pacific reflects the conglomerate's weak
execution record. The company's highly leveraged capital
structure and its exposure to cyclical industries such as iron
ore, real estate, and special steel also constrain the rating.
Strong parent support and CITIC Pacific's diversified assets
across industries temper these weaknesses.
RELATED CRITERIA AND RESEARCH
-- 2008 Corporate Criteria: Analytical Methodology, April
-- 2008 Corporate Criteria: Ratios And Adjustments, April
-- Rating Methodology For European Investment Holding And
Operating Holding Companies, May 28, 2004