Fitch rates AVIC notes BBB

Fitch Ratings said it assigned a long-term local-currency issuer default rating and a local-currency senior unsecured rating of BBB to AVIC International Holding Corp.

Fitch also said it assigned an expected BBB rating to AVIC International's proposed notes denominated in offshore Chinese yuan.

The notes will be issued by AVIC International Finance & Investment Ltd. and unconditionally and irrevocably guaranteed by AVIC International (Hong Kong) Group Ltd.

The outlook is stable.

In place of a guarantee, AVIC International has granted a keepwell deed and a deed of equity interest purchase undertaking to ensure that the issuer and the guarantor have sufficient assets and liquidity to meet their respective obligations for the senior notes, Fitch said.

AVIC's rating is assessed by notching down one level from China's long-term issuer default rating to reflect the very strong linkage between AVIC and its 100% parent, the state-owned Assets Supervision and Administration Commission, the agency said.

The company is the backbone of China's military and civilian aviation manufacturing industry, Fitch said.

It has a monopoly in military aircraft and short-range missile manufacturing output and maintenance with an 80% to 90% share of the country's civilian aviation manufacturing output, Fitch said.

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