S&P: Kunlun Energy bonds A+

S&P said it assigned an A+ long-term issue rating and cnAAA long-term Greater China regional scale rating to the proposed senior unsecured convertible bonds due 2019 of Kunlun Energy Co. Ltd.

The bonds are denominated in Chinese renminbi, but will be settled in dollars with the coupon paid on a semi-annual basis, S&P said.

The proceeds will be used for general corporate purposes, including the acquisition of PetroChina Kunlun Gas Co. Ltd. and working capital needs, the agency said.

The bondholders are entitled to convert the bonds into common shares of Kunlun Energy within the conversion period at the conversion price, S&P said.

The convertible bonds are considered 100% debt because they will rank pari passu with all other senior unsecured obligations of Kunlun Energy, the agency said.

The company's capital structure is likely to improve if the bondholders convert the bonds into common shares, S&P added.

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