OREANDA-NEWS. Fitch Ratings has assigned a final rating of 'A' to the USD500m 3.25% guaranteed notes due 2020 issued by CCBL (Cayman) Corporation Limited (CCBL (Cayman)), which is supported by a guarantee from CCB Leasing (International) Corporation Limited (CCBLI) and benefits from a keepwell and liquidity support deed and deed of asset purchase undertaking provided by CCB Financial Leasing Corporation Limited (CCB Leasing, A/Stable).

CCBL (Cayman) is an offshore special purpose vehicle (SPV) established by CCBLI, which functions as the primary overseas platform for CCB Leasing's aviation leasing business. CCBLI was established in 2014 and wholly owned by China Construction Bank Corporation (CCB, A/Stable) through CCB International Innovative Investment Limited. CCB Leasing has full managerial and operational control over CCBLI based on the service agreement with CCB International Innovative Investment Limited.

CCB Leasing is planning to use the proceeds of the note issue to fund acquisitions to support the growth of its overseas aviation leasing business. The final ratings are in line with the 'A(EXP)' rating Fitch assigned to the proposed note issue on 14 July 2015, and follow receipt of final documentation conforming to that already received by Fitch.

KEY RATING DRIVERS

The rating on the notes issued by CCBL (Cayman) primarily reflects Fitch's assessment of an extremely high probability of support from CCB Leasing to CCBLI and CCBL (Cayman). Although CCBLI is wholly owned by CCB and not by CCB Leasing, it is highly integrated into the operations of CCB Leasing, which has been authorised and mandated to exercise full managerial and operational control over CCBLI by CCBLI's owner. In Fitch's opinion, a default by the issuer would create enormous reputational risk for CCB Leasing and its ultimate parent, CCB.

CCB Leasing's ratings are underpinned by expectations of support from CCB and the Chinese sovereign (A+/Stable). For further information, refer to the rating action commentary dated 27 May 2015 titled "Fitch Rates CCB Leasing 'A' with Stable Outlook" and the Full Rating Report on CCB Leasing dated 11 June 2015.

The guaranteed notes constitute direct, general and unsecured obligations of CCBLI, and will rank pari passu with all other existing and future unsubordinated and unsecured obligations of the company.

The keepwell and liquidity support deed commits CCB Leasing to ensure that CCBLI has sufficient liquidity to meet its obligations under the guaranteed notes, and remains solvent and a going concern at all times. Under the deed of asset purchase undertaking, CCB Leasing is required to repurchase CCBLI's aircraft assets upon the occurrence of a triggering event in order for CCBLI to meet any outstanding debt obligations under the guaranteed notes. The triggering event refers to the situation in which CCBLI does not have sufficient liquidity to meet its payment obligations or an event of default.

The deed of asset purchase undertaking serves as an important mechanism to allow CCB Leasing to provide foreign currency liquidity to CCBLI in a timely manner. CCB Leasing does not require approval from the State Administration of Foreign Exchange for these foreign currency transfers because buying assets for leasing purposes is a part of CCB Leasing's operating activities sanctioned by the relevant authorities, including China Banking Regulatory Commission.

There could be practical difficulties enforcing the keepwell and liquidity support deed, which is not as strong as a guarantee. Nevertheless, the keepwell and liquidity support deed suggests a strong propensity for CCB Leasing to support CCBLI, if required.

RATING SENSITIVITIES

The rating on CCBL (Cayman)'s guaranteed notes would be directly correlated to any notable change in the willingness or ability of CCB Leasing to support CCBLI, if required. Likewise, any notable change in the perceived willingness or ability of China's government to support CCB and CCB Leasing in a full and timely manner is likely to affect the rating on the guaranteed notes.