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RPT-Fitch Rates MTN Programme of Azure Orbit II 'A(EXP)'
April 11, 2014 / 7:11 AM / 4 years ago

RPT-Fitch Rates MTN Programme of Azure Orbit II 'A(EXP)'

(Repeat for additional subscribers)

April 11 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has assigned Azure Orbit II International Finance Limited’s (Azure Orbit II) USD1bn Medium-Term Note (MTN) programme an expected Long-Term Rating of ‘A(EXP)'.

Azure Orbit II is an offshore special purpose vehicle managed by Bank of Communications Financial Leasing Co., Ltd (BOCOMM Leasing), a wholly owned subsidiary of Bank of Communications Co., Ltd (BOCOM; A/Stable). BOCOMM Leasing is strongly integrated with BOCOM and is a key subsidiary providing financial leasing services for the bank’s customers. Senior notes under the MTN programme will represent direct, unconditional, unsubordinated and unsecured obligations of the issuer. Furthermore, the MTN programme will be unconditionally and irrevocably guaranteed by the Macau branch of BOCOM (Macau Branch). Fitch views the Macau Branch as part of the same legal entity and plays an important role in developing the bank’s overseas businesses.

The junior to senior obligations under the MTN programme will be rated on a case-by-case basis in accordance with published criteria and after taking into consideration individual terms and conditions of those notes. However, Fitch reserves the right not to rate certain instruments issued under the programme, such as market-linked instruments.

The notes may be issued in any currency or of any tenor. The proceeds will be used for BOCOMM Leasing’s general corporate purposes. The final rating on the programme is contingent upon receipt of final documents conforming to information already received.

KEY RATING DRIVERS

Guaranteed notes issued under the MTN programme will represent direct, general, unconditional and unsecured obligations of BOCOM by virtue of the deed of guarantee given by the Macau Branch in favour of Azure Orbit II’s MTN Programme. Such obligations will rank pari passu with all other present and future unsecured obligations of the Macau Branch. The programme’s ratings reflect the ratings expected to be assigned to senior notes issued under the programme, and are in line with BOCOM’s Long-Term Issuer Default Rating (IDR) of ‘A’. BOCOM’s IDR is in turn based on an extremely high probability of support, if required, from the Chinese government (A+/Stable).

RATING SENSITIVITIES

Any changes to the programme’s rating will be directly correlated to changes in BOCOM’s IDR, which in turn will reflect any shift in the perceived willingness or ability of China’s government to support BOCOM in a full and timely manner. Should the deed of guarantee given by Macau Branch no longer be effective, then the rating of the programme could be downgraded.

The other ratings of BOCOM are unaffected by this action, and are as follows:

Long-Term IDR: ‘A’; Outlook Stable

Short-Term IDR: ‘F1’

Support Rating: ‘1’

Support Rating Floor: ‘A’

Viability Rating: ‘bb-'

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