June 12, 2017 / 7:28 AM / a month ago

Fitch Affirms Wuxi Construction at 'BBB+'; Outlook Stable

12 Min Read

(The following statement was released by the rating agency) HONG KONG, June 12 (Fitch) Fitch Ratings has affirmed Wuxi Construction and Development Investment Co., Ltd.'s (WCDI) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'BBB+' with a Stable Outlook. Fitch has also affirmed its US dollar senior unsecured notes issued by Xihui Haiwai I Investment Holdings Co., Limited (Xihui Haiwai I) at 'BBB+'. KEY RATING DRIVERS Linkage to Wuxi Municipality: WCDI's ratings are credit-linked but not equalised with Fitch's internal assessment of China's Wuxi Municipality. This is reflected in 100% state ownership, strong government oversight on its financials, and the strategic importance of the entity's operation to the government. These factors result in a high likelihood WCDI would get extraordinary support from the Wuxi authorities, if needed. Wuxi's Strong Creditworthiness: Wuxi is part of the province of Jiangsu, which is one of China's strongest economic regions in terms of gross regional product. The Wuxi municipality has a strong fiscal budget, a diversified socioeconomic profile and benefits from its strategic location as the centre of the Yangtze River Delta economic zone, one of China's top three economic zones. Legal Status Attribute Mid-Range: WCDI is registered as a state-owned limited liability company under Chinese company law. It is allowed to go bankrupt and its employees are not all civil servants. Strategic Importance Attribute Stronger: WCDI is Wuxi's major urban public infrastructure development and investment platform, and plays a very important role in implementing Wuxi's blueprint of urban development. WCDI is mandated by the government to develop municipal roads and bridges, city greening, sewage treatment of Taihu Lake and water conservancy. Control and Supervision Attribute Stronger: WCDI is wholly owned by the Wuxi government and reports to the Wuxi Department of Finance. The company's directors and senior management are appointed mainly by the government, and its major decisions need the government's approval. The company's financing plan and debt funding require government approval. Integration Attribute Stronger: WCDI's integration reflects the historical capital injection and subsidies made by the government. Since the establishment of WCDI in 2005, the company has received CNY18 billion in capital injection from the government up to the end of 2016, which represented 95% of equity. Weak Financial Profile: The company has a very high level of leverage and very low profitability because of its public welfare nature. The company's capex will stay high and it is unlikely that the company's standalone credit metrics will improve. However, with stable support from the Wuxi government, the risk has been mitigated. The notes were issued by Xihui Haiwai I, and are unconditionally and irrevocably guaranteed by Xihui International Co., Limited (Xihui International), a wholly owned subsidiary of WCDI. WCDI has granted a keepwell and liquidity support deed and a deed of equity interest purchase undertaking to ensure that Xihui International has sufficient assets and liquidity to meet its obligations under the guarantee for the notes. The notes are rated at the same level as WCDI's IDRs, given the strong link between Xihui International and WCDI, and because the keepwell and liquidity support deed and deed of equity interest purchase undertaking transfer the ultimate responsibility of payment to WCDI. RATING SENSITIVITIES A stronger support commitment from Wuxi Municipality may trigger positive rating action on WCDI. An upgrade of the internal assessment of Wuxi Municipality would result in an upgrade of WCDI. A significant weakening of WCDI's strategic importance to Wuxi, a dilution of the government's shareholding, and/or reduced explicit and implicit municipality support, may cause a downgrade. A downgrade could also stem from weaker fiscal performance or increased indebtedness of the municipality that causes our internal assessment of its creditworthiness to deteriorate. Contact: Primary Analyst Fan Gao Analyst +852 2263 9960 Fitch (Hong Kong) Limited 19/F Man Yee Building 68 Des Voeux Road Central Hong Kong Secondary Analyst Terry Gao Senior Director +852 2263 9972 Committee Chairperson Guido Bach Senior Director +49 69 768076 111 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com. Additional information is available on www.fitchratings.com Applicable Criteria International Local and Regional Governments Rating Criteria - Outside the United States (pub. 18 Apr 2016) here Rating of Public-Sector Entities – Outside the United States (pub. 22 Feb 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here#solicitation Endorsement Policy here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEB SITE AT WWW.FITCHRATINGS.COM. PUBLISHED RATINGS, CRITERIA, AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE, AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE CODE OF CONDUCT SECTION OF THIS SITE. DIRECTORS AND SHAREHOLDERS RELEVANT INTERESTS ARE AVAILABLE here. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE. Copyright © 2017 by Fitch Ratings, Inc., Fitch Ratings Ltd. and its subsidiaries. 33 Whitehall Street, NY, NY 10004. Telephone: 1-800-753-4824, (212) 908-0500. Fax: (212) 480-4435. Reproduction or retransmission in whole or in part is prohibited except by permission. All rights reserved. In issuing and maintaining its ratings and in making other reports (including forecast information), Fitch relies on factual information it receives from issuers and underwriters and from other sources Fitch believes to be credible. Fitch conducts a reasonable investigation of the factual information relied upon by it in accordance with its ratings methodology, and obtains reasonable verification of that information from independent sources, to the extent such sources are available for a given security or in a given jurisdiction. The manner of Fitch’s factual investigation and the scope of the third-party verification it obtains will vary depending on the nature of the rated security and its issuer, the requirements and practices in the jurisdiction in which the rated security is offered and sold and/or the issuer is located, the availability and nature of relevant public information, access to the management of the issuer and its advisers, the availability of pre-existing third-party verifications such as audit reports, agreed-upon procedures letters, appraisals, actuarial reports, engineering reports, legal opinions and other reports provided by third parties, the availability of independent and competent third- party verification sources with respect to the particular security or in the particular jurisdiction of the issuer, and a variety of other factors. Users of Fitch’s ratings and reports should understand that neither an enhanced factual investigation nor any third-party verification can ensure that all of the information Fitch relies on in connection with a rating or a report will be accurate and complete. Ultimately, the issuer and its advisers are responsible for the accuracy of the information they provide to Fitch and to the market in offering documents and other reports. In issuing its ratings and its reports, Fitch must rely on the work of experts, including independent auditors with respect to financial statements and attorneys with respect to legal and tax matters. Further, ratings and forecasts of financial and other information are inherently forward-looking and embody assumptions and predictions about future events that by their nature cannot be verified as facts. As a result, despite any verification of current facts, ratings and forecasts can be affected by future events or conditions that were not anticipated at the time a rating or forecast was issued or affirmed. The information in this report is provided “as is” without any representation or warranty of any kind, and Fitch does not represent or warrant that the report or any of its contents will meet any of the requirements of a recipient of the report. A Fitch rating is an opinion as to the creditworthiness of a security. This opinion and reports made by Fitch are based on established criteria and methodologies that Fitch is continuously evaluating and updating. Therefore, ratings and reports are the collective work product of Fitch and no individual, or group of individuals, is solely responsible for a rating or a report. The rating does not address the risk of loss due to risks other than credit risk, unless such risk is specifically mentioned. Fitch is not engaged in the offer or sale of any security. All Fitch reports have shared authorship. Individuals identified in a Fitch report were involved in, but are not solely responsible for, the opinions stated therein. The individuals are named for contact purposes only. A report providing a Fitch rating is neither a prospectus nor a substitute for the information assembled, verified and presented to investors by the issuer and its agents in connection with the sale of the securities. Ratings may be changed or withdrawn at any time for any reason in the sole discretion of Fitch. Fitch does not provide investment advice of any sort. Ratings are not a recommendation to buy, sell, or hold any security. Ratings do not comment on the adequacy of market price, the suitability of any security for a particular investor, or the tax-exempt nature or taxability of payments made in respect to any security. Fitch receives fees from issuers, insurers, guarantors, other obligors, and underwriters for rating securities. Such fees generally vary from US$1,000 to US$750,000 (or the applicable currency equivalent) per issue. In certain cases, Fitch will rate all or a number of issues issued by a particular issuer, or insured or guaranteed by a particular insurer or guarantor, for a single annual fee. Such fees are expected to vary from US$10,000 to US$1,500,000 (or the applicable currency equivalent). The assignment, publication, or dissemination of a rating by Fitch shall not constitute a consent by Fitch to use its name as an expert in connection with any registration statement filed under the United States securities laws, the Financial Services and Markets Act of 2000 of the United Kingdom, or the securities laws of any particular jurisdiction. Due to the relative efficiency of electronic publishing and distribution, Fitch research may be available to electronic subscribers up to three days earlier than to print subscribers. For Australia, New Zealand, Taiwan and South Korea only: Fitch Australia Pty Ltd holds an Australian financial services license (AFS license no. 337123) which authorizes it to provide credit ratings to wholesale clients only. Credit ratings information published by Fitch is not intended to be used by persons who are retail clients within the meaning of the Corporations Act 2001

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below