August 4, 2017 / 8:11 AM / a year ago

Fitch Rates Shougang's EUR Notes Final 'A-'

(The following statement was released by the rating agency) HONG KONG/SHANGHAI, August 04 (Fitch) Fitch Ratings has assigned Shougang Group Co., Ltd's (A-/Stable) EUR400 million 1.35% senior notes due 2020 a final rating of 'A-'. The notes are rated at the same level as Shougang's senior unsecured rating as they represent its direct, unconditional, unsecured and unsubordinated obligations. This final rating follows the receipt of documents conforming to information already received and is in line with the expected rating assigned on 29 May 2017. KEY RATING DRIVERS Strong Linkage with Beijing: Shougang's ratings are linked to Fitch's internal assessment of the creditworthiness of the Beijing municipality, reflecting the company's strong operational and strategic ties with the Beijing government. Shougang is 100% owned by the Beijing State-Owned Assets Supervision and Administration Commission (SASAC). The Beijing municipality has a robust budgetary performance, a strong and well-diversified socio-economic profile and a close relationship with the China sovereign (A+/Stable) owing to its status as the capital. The Stable Outlook reflects our expectation that Shougang's operations will remain stable and government support will remain strong. Key to Implementing China's Strategy: Shougang is currently undertaking two major developments, New Shougang Beijing Development and Caofeidian Development, which are considered core parts of China's coordinated development plan for the Beijing-Tianjin-Hebei (Jingjinji) region. The primary task of the Jingjinji plan is to divert Beijing's non-capital functions to surrounding regions so that Beijing only maintains its function as a cultural, political, international-exchange and innovation centre. Increasing Focus on Public Service: Shougang was categorised under the Special Functions group of Beijing SASAC after its transition from steel producer to public-service provider in 2010. We expect close to 50% of Shougang's capex for 2017-2019 to be used for public-service functions, such as the development of Caofeidian and New Shougang Beijing, and environmental projects, such as garbage disposal and desalination plants. Record of Support: Shougang has received close to CNY24 billion of direct funding support from the central and Beijing governments since 2008. Beijing Finance Bureau also provided CNY10 billion of the CNY20 billion Shougang Fund, which was set up to support Shougang's developments in Caofeidian and New Shougang Beijing. This is the first time the Beijing Finance Bureau has provided funding directly to a fund. We expect government support to remain strong for Shougang given the importance of the projects to the state. Significant Steel Producer: Shougang is China's fifth-largest steel producer by volume and ranks among the top three producers in various high-value-add products, such as auto and appliance sheets. DERIVATION SUMMARY Shougang's ratings are credit linked to the Beijing municipality, reflecting the company's strong operational and strategic ties with the Beijing government through carrying out government-directed initiatives, such as the New Shougang Beijing Development and the Caofeidian Development. KEY ASSUMPTIONS Fitch's key assumptions within our rating case for the issuer include: - iron-ore price assumptions in line with Fitch's commodity forecast of USD45/tonne for 2018-2019 and in the long term; - stable steel production volume; and - capex estimated at CNY15.5 billion in 2017 and CNY21.9 billion in 2018. RATING SENSITIVITIES Positive: Developments that may, individually or collectively, lead to positive rating action include: - an upgrade of Fitch's internal assessment of the creditworthiness of the Beijing municipality; or - if Shougang's legal, operational and strategic linkages with the Beijing municipality are strengthened. Negative: Developments that may, individually or collectively, lead to negative rating action include: - a lowering of Fitch's internal assessment of the creditworthiness of the Beijing municipality; or - a weakening of Shougang's legal, operational and strategic linkages with the Beijing municipality LIQUIDITY Comfortable Liquidity: As of end-2016, Shougang's cash and equivalents stood at CNY26.9 billion and its unused facilities at CNY275 billion, compared with short-term debt of CNY131 billion. The company has always been able to roll over its short-term bank loans. Contact: Primary Analyst Laura Zhai Director +852 2263 9974 19/F Man Yee Building 68 Des Voeux Road Central, Hong Kong Secondary Analyst Charles Li Analyst +86 21 5097 3016 Committee Chairperson Kalai Pillay Senior Director +65 6796 7221 Date of Relevant Rating Committee: 17 November 2016 Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: Additional information is available on Applicable Criteria Criteria for Rating Non-Financial Corporates - Effective from 27 September 2016 to 10 March 2017 (pub. 27 Sep 2016) here Parent and Subsidiary Rating Linkage (pub. 31 Aug 2016) here Additional Disclosures Dodd-Frank Rating Information Disclosure Form here Solicitation Status here 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