Fitch rates Shanghai Electric notes A

Fitch Ratings said it assigned an expected rating of A to Shanghai Electric Group Co. Ltd.’s proposed senior unsecured notes.

The euro-denominated notes will be issued by its wholly owned subsidiary, Shanghai Electric Newage Co. Ltd. and unconditionally and irrevocably guaranteed by Shanghai Electric.

The proposed notes are rated at the same level as Shanghai Electric’s senior unsecured debt rating as they represent direct, unconditional, unsecured and unsubordinated obligations of the company, Fitch said.

Shanghai Electric’s rating is based on an assessment of its standalone credit profile at A-, plus a one-notch uplift to reflect the company’s moderate linkages with the Shanghai municipal government, the agency said.

Shanghai Electric maintains a competitive market position and strong technology leadership in China’s power equipment manufacturing industry, which is an oligopoly market with relatively high barriers to entry, Fitch said.

The company benefits from a moderate degree of product diversification, the agency added.

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