Fitch rates Huarong Finance notes A

Fitch Ratings said it assigned an expected A rating to Huarong Finance II Co., Ltd.’s proposed issue of dollar-denominated senior unsecured notes under the $5 billion medium-term note program.

China Huarong Asset Management Co., Ltd. plans to use the proceeds as working capital and for general corporate purposes, Fitch said.

The notes will be unconditionally and irrevocably guaranteed by China Huarong International Holdings Ltd., a wholly owned subsidiary of China Huarong.

They are issued under China Huarong’s medium-term note program and will be senior unsecured obligations of Huarong International and rank pari passu with all other senior unsecured obligations of Huarong International, the agency said.

In place of a guarantee, China Huarong has granted a keepwell deed and a deed of equity interest purchase, investment and liquidity support undertaking to ensure that Huarong International has sufficient assets and liquidity to meet its obligations under the guarantee for the notes under the program, Fitch said.

The notes are rated at the same level as China Huarong’s issuer default rating, given the strong link between China Huarong and Huarong International and because the deeds transfer the ultimate responsibility of payment to China Huarong, the agency said.

Fitch also said it believes China Huarong intends to maintain its reputation and credit profile in the international offshore market.

The company is unlikely to default on offshore obligations, the agency added.

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