S&P: Yancoal securities cnBB-

S&P said it assigned a B+ long-term issue rating and cnBB- long-term Greater China regional scale rating to a proposed issue of dollar-denominated fixed-rate senior perpetual securities by Yancoal International Resources Development Co. Ltd.

Yanzhou Coal Mining Co. Ltd. provides an unconditional and irrevocable guarantee for the securities, S&P said.

Yanzhou Coal is the second-largest coal producer controlled by the Shandong provincial government and is the sole owner of the issuer, Yancoal International Resources, the agency explained.

The issuer intends to use the issuance proceeds to refinance its existing debt and on-lend to Yanzhou Coal's subsidiaries for capital expenditure, working capital and general corporate purposes, S&P said.

The agency said it will treat 100% of the securities as debt in the financial ratio calculations of Yanzhou Coal.

The issue rating on the securities is one notch below the issuer credit rating on Yanzhou Coal to reflect the optional deferral of the coupon, S&P added.

The rating on Yanzhou Coal also factors in the extraordinary government support, if needed, the agency added.

The issuance is expected to have minimal impact on Yanzhou Coal's cash flow and leverage ratios, S&P said.

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