Moody’s rates Beijing Automotive notes A3

Moody’s Investors Service said it assigned an A3 rating to the proposed senior unsecured euro notes to be issued by BAIC Inalfa HK Investment Co., Ltd., an indirectly owned subsidiary of Beijing Automotive Group Co., Ltd.

The outlook is stable.

The proceeds from the notes issuance will be used for the group’s offshore refinancing and general corporate purposes, Moody’s said.

The rating on the notes incorporates the company’s baseline credit assessment of Baa3 and a three-notch uplift based on an expectation of extraordinary support from the Beijing municipal government to the company, the agency said.

The ratings reflect the company’s strong competitive position in China’s auto market, which is large and exhibits considerable growth potential, Moody’s said.

The company’s strong competitive position largely mirrors the strength of its two key joint ventures, Beijing Benz Automotive Co., Ltd. and Beijing Hyundai Motor Co., Ltd., the agency said.

These joint-venture companies are key cash flow and profit contributors for the company, Moody’s added.

The company’s credit quality also is underpinned by the high likelihood of support for its joint ventures from its financially capable international partners, Hyundai Motor Co. and Daimler AG, the agency said.

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