Fitch upgrades China Railway

Fitch Ratings said it upgraded China Railway Group Ltd.’s long-term issuer default rating and senior unsecured rating to A- from BBB+.

Fitch also said it upgraded the senior unsecured notes issued by the company’s subsidiary, China Railway Resources Huitung Ltd., to A- from BBB+.

The outlook is stable.

The upgrades reflect the upward reassessment of China Railway’s strategic importance to the Chinese sovereign, the agency said.

Fitch said it believes competition in the Chinese railway construction industry is low, even though there are two major state-owned companies in this space.

In addition, the strategic importance and scale of railway construction in China will likely remain high for many years, as there is a high need for the construction of urban railways throughout China, the agency said.

The company’s strategic importance to the sovereign is similar to some other large infrastructure construction companies that operate in sub-segments with only one dominant player, Fitch said.

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