Moody’s could drop China Shenhua

Moody's Investors Service said it placed the Aa3 issuer rating of China Shenhua Energy Co. Ltd. and the A1 rating of the dollar-denominated notes issued by China Shenhua Overseas Capital Co. Ltd. on review for downgrade.

The notes are irrevocably and unconditionally guaranteed by Shenhua Hong Kong Ltd. (unrated) – a wholly owned subsidiary of China Shenhua – and supported by a keepwell deed and a deed of equity interest purchase undertaking provided by China Shenhua.

Moody’s said the review for downgrade follows its global rating actions on rated mining companies. The actions reflect the agency’s effort to recalibrate the ratings in its global mining portfolio, in view of the adverse credit conditions in the mining sector globally.

As part of an ongoing assessment of mining companies, Moody's sharply reduced its price sensitivity assumptions on Dec. 8. Since then, credit conditions in the mining industry have weakened further, with prices continuing to decline. In fact, the likelihood has increased that prices for base metals, precious metals, iron ore and metallurgical and thermal coal will approach levels closer to Moody's stressed sensitivity scenario.

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