Fitch: China Vanke notes BBB+

Fitch Ratings said it assigned a long-term local-currency issuer default rating of BBB+ and a local-currency senior unsecured rating of BBB+ to China Vanke Co. Ltd.

Fitch also said it assigned an expected rating of BBB+ to the company's proposed senior unsecured Chinese yuan-denominated notes.

The notes, which will be issued by Bestgain Real Estate Ltd., are to be jointly and severally guaranteed by Vanke Real Estate (Hong Kong) Co. Ltd., a wholly owned subsidiary of China Vanke, the agency said.

China Vanke is unable to provide a guarantee to offshore subsidiaries without approval from the Chinese government, Fitch said. In place of a guarantee, China Vanke has granted a keepwell deed and a deed of equity interest purchase undertaking to ensure that the guarantor, Vanke Real Estate, has sufficient assets and liquidity to meet its obligations under the guarantee for the proposed yuan notes, the agency said.

Fitch said the keepwell and undertaking deeds signal a strong intention from China Vanke to honor its proposed debt obligations.

The company has diversified and multiple funding channels, including loans from domestic and foreign banks, project joint ventures and access to onshore and offshore capital markets, the agency said.

It also has exposure to trust financing, which provides more flexibility than loans from domestic banks, Fitch added.

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