Fitch reviews Baosteel Resources

Fitch Ratings said it placed Baosteel Resources International Co. Ltd.'s long-term foreign-currency issuer default rating and senior unsecured rating of BBB+ on Rating Watch Evolving (RWE) following the rating action taken on its parent, Baosteel Group Corp. (A-/RWE).

The agency also placed the A- rating on the $500 million 3 7/8% senior unsecured notes, due 2020, issued by wholly owned subsidiary, Baosteel Financing 2015 Pty Ltd., on Rating Watch Evolving. The notes are unconditionally and irrevocably guaranteed by Baosteel Resources and are rated at the same level as Baosteel Group. This is because Baosteel Group has granted an investment and keepwell deed and a liquidity-support covenant deed to ensure the issuer and Baosteel Resources have sufficient assets and liquidity to meet their respective obligations for the notes.

Fitch said Baosteel Resources is rated one level below its 100%-owner, Baosteel Group, due to its strong linkages to the parent arising from its unique position as the group's only offshore resource development platform, overseas resources trading platform and offshore financing vehicle.

Baosteel Group is rated one notch above its standalone rating of BBB+ to reflect potential state support due to its strategic importance to China as the largest and most profitable steel company that drives development of the country's steel industry.

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