Moody's rates SIPG bonds A1

Moody's Investors Service said it assigned an A1 senior unsecured rating to the proposed dollar-denominated bonds to be issued by Shanghai Port Group (BVI) Development Co., Ltd., a wholly owned subsidiary of Shanghai International Port (Group) Co., Ltd. (SIPG).

The bonds will be irrevocably and unconditionally guaranteed by SIPG.

The outlook is stable.

The proceeds will be used to refinance existing debt, Moody's said.

SIPG's A1 issuer rating combines its baseline credit assessment of A2 and one-notch uplift for expected support from the government of China, if needed, the agency said.

SIPG's baseline credit assessment of A2 is underpinned by the company's unique position as the dominant operator of the Port of Shanghai, the largest container port globally, Moody's said.

SIPG also has strong liquidity and good access to the credit markets, the agency said.

These strengths are balanced by SIPG's increasing risk appetite, mainly due to growth in the company's debt-funded non-core investments and reduced throughput growth, Moody's said.

The challenging operating environment in the port sector, including prolonged trade tensions between the U.S. and China, is key constraint for SIPG's baseline credit assessment, which has limited headroom, the agency said.

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