Moody's rates Asia Aluminum bonds Ba3

Moody's Investors Service said it assigned its Ba3 senior unsecured bond rating to Asia Aluminum Holdings Ltd.'s proposed seven-year bonds of about $425 million. At the same time, the rating agency has assigned its Ba3 senior implied rating to Asia Aluminum. The outlook is stable.

Moody's said the Ba3 rating reflects the sound track record in aluminum extrusion operations in China and competitive low cost structure, production capacity poised to increase significantly in the next two to three years, favorable potential for demand growth in China for aluminum extrusions and flat-rolled products, strong liquidity with substantial cash on hand and apparent local government's support for its capacity expansion project.

At the same time, Moody's said the rating reflects construction and execution risks associated with its capacity expansion project, negative free cash flow, associated uncertainty as off-take and profitability of the capacity planned for rolled products are both untested and costs of raw materials are exposed to the volatility of the aluminum market.

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