S&P puts Shanghai International Port on watch

S&P said it placed the AA- long-term corporate credit rating and cnAAA long-term Greater China regional scale rating on Shanghai International Port (Group) Co. Ltd. on CreditWatch with negative implications.

The CreditWatch placement reflects the prospects of a rapid deterioration in the company’s financial strength given the company's plan to subscribe to the initial public offering of Postal Savings Bank of China on the Hong Kong Stock Exchange, the agency said.

Shanghai International Port, through its Hong Kong-based subsidiary, plans to invest up to $2.4 billion in the IPO as a cornerstone investor, representing a shareholding of slightly less than 5%, S&P said.

This unexpected and sizable investment, if primarily debt-funded, would significantly weaken Shanghai International’s financial strength, the agency said.

Prior to this transaction, the company had sound operating cash flows and low leverage, S&P said.

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