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Fitch Assigns Dong Yin Development First-Time 'A-' Rating; Outlook Stable
November 27, 2017 / 4:59 PM / 20 days ago

Fitch Assigns Dong Yin Development First-Time 'A-' Rating; Outlook Stable

(The following statement was released by the rating agency) HONG KONG, November 27 (Fitch) Fitch Ratings has assigned Dong Yin Development (Holdings) Limited (Dong Yin) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) of 'A-'. The Outlook is Stable. KEY RATING DRIVERS Linked to Parent: Dong Yin's ratings are credit-linked to those of its parent, China Orient Asset Management Co., Ltd. (COAM, A/Stable). This reflects COAM's 100% ownership of the subsidiary, stronger oversight and supervision by COAM, Dong Yin's strategic importance and its integration with COAM, along with mid-range legal status. These factors result in a strong likelihood that COAM would provide the subsidiary with extraordinary support, if needed. Dong Yin is classified as a credit-linked public-sector entity under Fitch's criteria. Parent's Strong Creditworthiness: COAM is one of the four big asset management companies established by the Chinese government to mitigate financial risks, preserve state-owned assets, and promote the reform and development of China's financial system. These asset management companies are also the wholesalers for non-performing assets in China. COAM is 98% owned by the Ministry of Finance and 2% by the National Council for Social Security Fund. Strategic Importance Attribute Stronger: Dong Yin, together with its core subsidiary, China Orient Asset Management (International) Holding Limited (COAMI, A-/Stable), is the major offshore financing and investment platform for COAM, with access to both onshore and offshore markets. By end-2016, Dong Yin's consolidated assets accounted for about 12% of the COAM group's total assets and its net profits represent around one-third of COAM group. Parental Integration Attribute Stronger: The parent provided credit enhancements, such as keepwell deeds and deeds of equity interest undertaking, to about 46% of Dong Yin's consolidated debt at end-2016. Shareholder loans from COAM represented more than 20% of Dong Yin's consolidated debt as at end-2016. As of end-September 2017, shareholder loans from COAM accounted more than 50% of Dong Yin's company-level debt and supported Dong Yin's funding. Control and Supervision Attribute Stronger: The members of Dong Yin's board of directors are directly appointed by its parent. Dong Yin's financing plan and indebtedness are closely monitored by its parent. Dong Yin's management needs to report the entity's financial and operational performance to COAM on a regular basis. The parent also conducts performance appraisals on Dong Yin and sends internal auditors to the subsidiary on an ad-hoc basis. Legal Status Attribute Mid-range: Dong Yin was incorporated as a limited liability company in Hong Kong. Therefore, Dong Yin's legal status does not indicate automatic assumption of its full liabilities by COAM. Moderate Standalone Profile: Dong Yin shares a similar client base with its parent and its standalone credit profile is similar to that of COAM. Dong Yin's credit profile is characterised by concentration on the Chinese real-estate sector and potential execution risk due to rapid expansion. Its fast-growing portfolio has yet to weather a full economic cycle and asset quality could come under pressure in an economic downturn. However, Fitch believes the support from its parent and ultimately from the China sovereign (A+/Stable) mitigates the potential risks. RATING SENSITIVITIES Linkage with Parent: Significant weakening of Dong Yin's strategic importance to its parent, dilution in the parent's shareholding, or reduced explicit and implicit parental support could lead to a wider rating gap between Dong Yin and its parent. On the other hand, increased explicit and implicit parental support could lead to equalisation of the ratings of COAM and Dong Yin. Creditworthiness of COAM: Any rating action on COAM would lead to changes in the ratings of Dong Yin as the latter's ratings are derived from that of COAM. Contact: Primary Analyst Jean Luo Associate Director +852 2263 9952 Fitch (Hong Kong) Limited 19/F Man Yee Building 68 Des Voeux Road Central, Hong Kong Secondary Analyst Kelvin Tsui Director +852 2263 9965 Committee Chairperson Guido Bach Senior Director +49 69 768 076 111 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. 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