Fitch Rates Guangzhou Metro Group's USD MTN Drawdown Final 'A'
OREANDA-NEWS. Fitch Ratings has assigned Guangzhou Metro Investment Finance (BVI) Ltd.'s (GMBVI) USD3bn medium-term note (MTN) programme a final Long-Term Rating of 'A'. At the same time, Fitch has assigned the USD400m 2.875% senior unsecured notes due 2018 and USD200m 3.375% senior unsecured notes due 2020 under the MTN programme final ratings of 'A'. The proceeds will be used for general corporate purposes.
The assignment of the final rating on the MTN programme and USD notes follows the receipt of documents conforming to information already received. The final ratings are in line with the expected ratings assigned on 20 November 2015.
KEY RATING DRIVERS-USD Notes
The notes, to be issued by GMBVI, are unconditionally and irrevocably guaranteed by Guangzhou Metro Investment Finance (HK) Limited (GMHK), a wholly owned subsidiary of Guangzhou Metro Group (GZMG). The notes will be senior unsecured obligations of GMHK and also rank pari passu with all other senior unsecured obligations of GMHK.
In place of a guarantee, GZMG has granted a keepwell and liquidity support deed and a deed of equity interest purchase undertaking to ensure that GMHK has sufficient assets and liquidity to meet its obligations under the guarantee for the notes.
The notes under the MTN programme are rated at the same level as GZMG's IDR, given the strong link between GMHK and GZMG and because the keepwell and liquidity support deed and deed of equity interest purchase undertaking transfer the ultimate responsibility of payment to GZMG.
In Fitch's opinion, both the keepwell and liquidity support deed and the deed of equity interest purchase undertaking signal a strong intention from GZMG to ensure that GMHK has sufficient funds to honour the debt obligations. The agency also believes GZMG intends to maintain its reputation and credit profile in the international offshore market, and is unlikely to default on its offshore obligations. Additionally, a default by GMHK could have significant negative repercussions on GZMG for any future offshore funding.
Fitch would like to emphasise that the MTN programme's rating is for the programme in general and each individual issue under it may not be assigned the same rating as that of the programme.
RATING SENSITIVITIES-USD notes
Any rating action on GZMG's IDR would result in similar rating actions on the MTN programme and the rated notes under the MTN programme.