Fitch puts Kunming Rail on watch

Fitch Ratings said it placed Kunming Rail Transit Group Co., Ltd.'s BBB+ long-term foreign- and local-currency issuer default ratings and senior unsecured debt on rating watch negative.

“The RWN reflects the lack of clarity around the Yunnan provincial government's role as an ultimate sponsor in KRTG's recent financing plans, which may lead to a reassessment of our GRE scores and ultimately KRTG's IDRs. Recent developments suggest the Kunming municipal government's active and direct involvement in KRTG's funding structure, potentially indicating its stronger control and oversight of the company's financial activities than Yunnan province as the sponsor government. It is unclear at this stage whether recent developments were coordinated efforts with Yunnan province,” Fitch said in a press release.

The agency said it aims to resolve the RWN once it has more clarity on the government's involvement in KRTG’s development, the region's prospects, and the issuer's financing plan. “This RWN will be resolved within six months.”

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