S&P gives China Modern Dairy BBB

S&P said it gave BBB ratings to China Modern Dairy Holdings Ltd. and its planned senior unsecured notes.

“The rating on CMD reflects our view that the company, which is 51% owned by Mengniu, is a highly strategic subsidiary of the parent. This is based on our expectation that Mengniu will maintain control of CMD, and CMD will remain the largest raw milk supplier to Mengniu (which is integral to Mengniu's business and growth strategy) and receive extraordinary support when needed,” S&P said in a press release.

The agency noted CMD has 10-year supply agreements Mengniu and New Hope Dairy Co. Ltd. that guarantee 80% of its volume sales, providing some stability to the company's revenue and EBITDA.

The outlook is stable.

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