S&P reviews Guotai Junan

S&P said it placed its BBB long-term and A-2 short-term issuer credit ratings and its cnA long-term and cnA-2 short-term Greater China regional scale ratings on Guotai Junan Securities Co. Ltd. (GTJA) and its subsidiary Guotai Junan International Holdings Ltd. (GTJAI) on CreditWatch with positive implications.

The agency placed the ratings on CreditWatch to reflect a possible enhancement of Guotai Junan Securities’ capital following the company's March 28 announcement that it will make a global offering of 1.04 billion H shares. Guotai Junan Securities is likely to raise about Hong HK$16.5 billion from the issuance, subject to market conditions.

"We estimate that the new equity issuance will boost GTJA's risk-adjusted capital (RAC) ratio before adjustments by around 3 percentage points, other things being equal," S&P credit analyst Eason Yi said in a news release.

"This capital issuance, together with the Chinese securities company's good financial performance and modest asset growth in 2016, could potentially sustain the RAC ratio before adjustments above 15% by the end-2017. This ratio is in line with a very strong capital position."

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