Moody’s ups Zhaohai Investment bonds to Baa1

Moody's Investors Service said it upgraded the backed senior unsecured rating of the existing dollar-denominated bonds issued by Zhaohai Investment (BVI) Ltd., a wholly owned subsidiary of Tianjin Binhai New Area Construction & Investment Group Co., Ltd. (TBCI), to Baa1 from Baa2.

The bonds include the $300 million 3.1% bonds due in 2018 and the $500 million 4% bonds due in 2020.

At the same time, the agency affirmed Tianjin Binhai’s Baa1 issuer rating.

The outlook is stable.

On July 3, Tianjin Binhai announced that its bondholders consented to replacing the keepwell and liquidity support deed and the deed of equity interest purchase (collectively, the keepwell deed and EIPU) with a deed of guarantee provided by Tianjin Binhai.

Meanwhile, the bondholders also waived the breach of certain covenants by the previous guarantor, Binhai Jiantou (Hong Kong) Development Ltd. and removed the financial covenants thereafter.

The effectiveness is subject to the execution of certain documents.

Tianjin Binhai also said it completed the registration with SAFE for the deed of guarantee.

"The change to guarantee from the keepwell structure has enhanced the credit quality of the bonds with a stronger form of support, because the guarantee has a closer linkage to TBCI in relation to the repayment of the bonds," Moody's vice president and senior credit officer Franco Leung said in a news release.

As a result, Moody's now rates Tianjin Binhai’s guaranteed dollar-denominated notes at the same level as its Baa1 issuer rating.

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