Fitch rates Huarong notes A-

Fitch Ratings said it assigned an expected A rating to Huarong Finance 2017 Co., Ltd.'s proposed senior unsecured notes to be issued under its $10 billion medium-term note program.

The agency also said it assigned an expected A- rating to the proposed dollar-denominated perpetual securities issued under the program.

Huarong Finance 2017 is wholly owned by China Huarong International Holdings Ltd., which is wholly owned by China Huarong Asset Management Co., Ltd.

The ratings are credit-linked to those of the Chinese sovereign and notched one level below, Fitch explained.

This reflects the company's state ownership and strong control by the authorities, the agency said.

Huarong's strategic ties with the state mean there is a high likelihood that the company would receive extraordinary support from the sovereign, if needed, Fitch said.

The agency also said it believes Huarong intends to maintain its reputation and credit profile in the international offshore market and is unlikely to default on offshore obligations.

The rating on proposed dollar perpetual securities is one-notch lower than Huarong's A issuer default rating.

Although the notes are unsubordinated, the one-notch difference reflects that, in a stress scenario, Huarong may decide to prioritize senior unsecured debt when extraordinary support is needed, Fitch said.

© 2015 Prospect News.
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