OREANDA-NEWS. Fitch Ratings has assigned a final rating of 'A+' to the USD500m 2.25% guaranteed notes due 2021 issued by CDBI Treasure I Limited (CDBIT I) under its medium-term note (MTN) programme. The notes are supported by a guarantee from China Development Bank International Holdings Limited (CDBI; A+/Stable) and benefits from a keepwell and liquidity support deed and deed of equity purchase undertaking provided by China-based China Development Bank Capital Co., Ltd (CDBC; A+/Stable).

The final rating is in line with the expected rating assigned to the note issue on 20 July 2016, and follows the receipt of final documentation conforming to that already received by Fitch.

CDBIT I is an offshore special purpose vehicle incorporated in the British Virgin Islands with limited liability and is a direct wholly owned subsidiary of CDBI, which is CDBC's core overseas investment and financing platform.

KEY RATING DRIVERS

The rating on the senior notes issued under the programme by CDBIT I primarily reflects our assessment of an extremely high probability of support from CDBC to both CDBI and CDBIT I. A default by the issuer or CDBI would create enormous reputational risk for CDBC and its ultimate parent, China Development Bank Corporation (CDB; A+/Stable).

The notes issued under the programme constitute CDBI's direct, general and unsecured obligations and will rank pari passu with CDBI's other existing and future unsubordinated and unsecured obligations.

The keepwell and liquidity support deed and deed of equity purchase undertaking require CDBC to purchase or procure the equity interest held directly by CDBIT I, CDBI or any other offshore subsidiary if a triggering event occurs. A triggering event may include a financial ratio failure, liquidity notice failure, default or a shortfall of cash flow or liquidity to meet its payment obligations.

The deed of equity purchase undertaking serves as a contingent mechanism allowing CDBC to provide foreign-currency liquidity to CDBI in a timely manner. CDBC will need approval to complete the equity interest purchase from CDB and the regulators, including from the Ministry of Commerce, National Development and Reform Commission, State-owned Assets Supervision and Administration Commission and State Administration of Foreign Exchange of the People's Republic of China. We believe the approval process will be expedited for CDBC to support CDBI in a timely manner due to CDB's important role and significance to the government as China's largest policy bank.

Fitch believes there could be practical difficulties enforcing the keepwell and asset purchase deed, which is not as strong as a guarantee. Nevertheless, the keepwell and liquidity support deed and deed of equity purchase undertaking suggest a strong propensity for CDBC to support CDBI and bonds issued by CDBIT I, if required.

RATING SENSITIVITIES

The rating on CDBIT I's guaranteed notes is directly correlated with significant changes in CDBC's and CDB's willingness or ability to support CDBI if required. The rating on the notes would also be affected by significant changes in the perceived willingness or ability of China's sovereign to support CDB and CDBC in a full and timely manner.