S&P: China Development on watch

Standard & Poor's said it placed the ratings on the China Development Financial Holding Corp. group on CreditWatch with negative implications after news of an impending acquisition.

The affected ratings include its BBB- long-term and A-3 short-term counterparty credit ratings, as well as its cnA- long-term and cnA-2 short-term Greater China regional scale ratings.

The ratings on watch also include the BBB long-term and A-2 short-term counterparty credit ratings and cnA long-term and cnA-2 short-term Greater China regional scale ratings on China Development Industrial Bank, S&P said, and the BBB long-term and A-2 short-term counterparty credit ratings and as cnA long-term and cnA-2 short-term Greater China regional scale ratings on KGI Securities Co. Ltd.

The CreditWatch placements follow news that the company intends to fully acquire Cosmos Bank, the agency said.

The transaction is awaiting regulatory approval.

The CreditWatch status reflects the potential weakening of the company's group's post-acquisition capital strength given that the group will fund the purchase through cash and internal capital reserves, S&P said.

The negative watch also reflects the goodwill incurred, the agency said.

The CreditWatch also considers the risk that the credit profile of the group's combined banking entity may weaken the group's overall credit profile, S&P said.

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