S&P lowers Shanghai International Port

S&P said it lowered the long-term corporate credit rating on Shanghai International Port (Group) Co. Ltd. to A+ from AA-.

The agency also said it affirmed the company’s cnAAA long-term Greater China regional scale rating.

S&P also said it removed all of the ratings from CreditWatch, where they were placed with negative implications Sept. 15.

The outlook is stable.

The downgrade reflects an expectation that the company’s financial strength will rapidly deteriorate following its debt-funded investment in the initial public offering of Postal Savings Bank of China, S&P said.

Shanghai International, through its Hong Kong-based subsidiary, invested about HK$16 billion into the bank, the agency explained.

The investment should significantly weaken Shanghai International’s key credit metrics over next 24 months even though it is a long-term strategic asset for the company in pursuit of business diversification, S&P said.

Shanghai Investment has a robust market position, geographical advantage, extensive catchment area and high operating efficiency, the agency said.

But the company's performance has been affected by China's economic slowdown, industrial structural adjustments, commodity price slumps and sluggish global trade, S&P said.

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