March 20, 2017 / 10:48 AM / in 10 months

Fitch Affirms China Orient Asset Management (International) at 'A-'

(The following statement was released by the rating agency) HONG KONG, March 20 (Fitch) Fitch Ratings has affirmed China Orient Asset Management (International) Holding Limited's (COAMI) Long-Term Foreign- and Local-Currency Issuer Default Ratings at 'A-'. The Outlook is Stable. Fitch has also affirmed COAMI's USD300m 2.25% US dollar senior unsecured guaranteed bonds due 2019 a final rating of 'A-'. The bonds are issued by Dongxing Voyage Company Limited. KEY RATING DRIVERS Linked to Parent: COAMI's ratings are credit-linked to those of its parent, China Orient Asset Management Co., Ltd. (COAM, A/Stable). This reflects COAM's 100% ownership of the subsidiary, strong oversight and supervision of the subsidiary by COAM, the strategic importance of COAMI and its mid-range integration with COAM. These factors result in a strong likelihood that COAM would provide the subsidiary with extraordinary support, if needed. COAMI is classified as a credit-linked public-sector entity under Fitch's criteria. Parent's Strong Creditworthiness: COAM is one of the four big asset management companies established by the Chinese government to mitigate financial risks, preserve state-owned assets, and promote the reform and development of China's financial system. These asset management companies are also the wholesalers for non-performing assets in China. COAM is 98% owned by the Ministry of Finance, and 2% by the National Council for Social Security Fund. Strategic Importance: COAMI is the major offshore financing and investment platform for COAM, with access to both the onshore and offshore markets. By end-2015, COAMI accounted for about 22% of the COAM group's net profit. Parental Integration: The parent has provided credit enhancements, such as keepwell deeds and deeds of equity interest undertaking, to about 68% COAMI's total debts at the end of 2015. COAM has also provided more than CNY6bn in shareholder's loans to COAMI, which represented 19% of its total debt. Tight Control and Supervision: The members of COAMI's board of directors are directly appointed by its parent. COAMI's financing plan and indebtedness are closely monitored by its parent. The management of COAMI needs to report the entity's financial and operational performance to COAM on a regular basis. The parent also conducts performance appraisals on COAMI and sends internal auditors to COAMI on an ad-hoc basis. Moderate Standalone Profile: COAMI shares a similar client base with its parent, and its standalone credit profile is similar to that of COAM. COAMI's credit profile is characterised by concentration on the Chinese real-estate sector and potential execution risk due to rapid expansion. Its fast-growing portfolio has yet to weather a full economic cycle and asset quality could come under pressure in an economic downturn. However, Fitch believes the support from its parent and ultimately from the China sovereign (A+/Stable), mitigates the potential risks. RATING SENSITIVITIES Linkage with Parent: Significant weakening of COAMI's strategic importance to its parent, dilution in the parent's shareholding, or reduced explicit and implicit parental support could lead to a wider rating gap between COAMI and its parent. Nevertheless, significant improvement of COAMI's strategic importance, or increased explicit and implicit parental support could lead to equalisation of the ratings of COAM and COAMI. Creditworthiness of COAM: Any rating action on COAM would lead to changes in the ratings of COAMI as the latter's ratings are derived from that of COAM. Contact: Primary Analyst Jean Luo Associate Director +852 2263 9952 Fitch (Hong Kong) Limited 19/F Man Yee Building 68 Des Voeux Road Central, Hong Kong Secondary Analyst Terry Gao Director +852 2263 9972 Committee Chairperson Guido Bach Senior Director +49 69 768 076 111 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: Additional information is available on Applicable Criteria International Local and Regional Governments Rating Criteria - Outside the United States (pub. 18 Apr 2016) here Rating of Public-Sector Entities – Outside the United States (pub. 22 Feb 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here _id=1020791 Solicitation Status here Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. 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