S&P rates Shanghai Lingang notes BBB+

S&P said it assigned its BBB+ long-term issue rating to the planned Chinese renminbi- and foreign-currency-denominated senior unsecured notes that Shanghai Lingang Economic Development (Group) Co. Ltd. (SLG) will guarantee.

Lingang Wings Inc., an indirectly wholly owned special purpose financing vehicle of SLG, will issue the notes.

“We equalize the issue rating on the notes with our issuer credit rating on SLG (BBB+/stable/--) because we believe the senior unsecured noteholders will not necessarily be materially disadvantaged relative to the priority debtholders in terms of recovery prospects. We expect the noteholders to benefit from the extremely high likelihood that SLG will receive extraordinary support from the Shanghai municipal government, SLG's sole shareholder, in case of financial stress. This mitigates the fact that SLG's priority debt ratio was 52.3% as of Dec. 31, 2021, moderately above our 50% notching-down threshold,” S&P said in a press release.

SLG intends to use the proceeds to construct green and sustainable projects in the Lingang Special Area, replace offshore debt, and for other general corporate purposes.

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