Moody’s rates MTR notes Aa1

Moody's Investors Service said it assigned an Aa1 rating to the dollar-denominated senior unsecured notes to be issued by MTR Corp. (C.I.) Ltd., a wholly-owned financing subsidiary of MTR Corp. Ltd.

These notes are irrevocably and unconditionally guaranteed by MTR and the proposed issuance is pursuant to its rated $4 billion medium term note program.

MTR's Aa1 issuer rating is unchanged and the outlook is negative.

The proceeds will be used to refinance or fund existing and future eligible green projects, the agency explained.

The ratings reflect the company’s underlying credit strength and baseline credit assessment of A2, Moody’s said, as well as the very high support expected from the Hong Kong government.

This support provides a four-notch rating uplift under the agency’s joint default analysis approach for government-related issuers, the agency said.

The ratings also consider MTR’s strategic importance in providing metropolitan mass transport in Hong Kong, strong market position and favorable operating environment with stable passenger patronage, Moody’s said.

These strengths are offset by its exposure to relatively cyclical cash flow from the property sector, the agency said, and the increased financial and execution risks stemming from its new railway projects.

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