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Fitch Assigns First-Time 'BBB+'/Stable Rating to Chengdu Communications Investment Group
June 16, 2017 / 9:37 AM / a month ago

Fitch Assigns First-Time 'BBB+'/Stable Rating to Chengdu Communications Investment Group

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(The following statement was released by the rating agency) HONG KONG, June 16 (Fitch) Fitch Ratings has assigned China-based Chengdu Communications Investment Group Corporation Limited (CCIC) Long-Term Foreign- and Local-Currency Issuer Default Ratings of 'BBB+' with a Stable Outlook. KEY RATING DRIVERS Credit-Linked to Chengdu Municipality: CCIC's ratings are credit linked to, but not equalised with, those of Chengdu municipality. This reflects strong government oversight and supervision, the strategic importance of CCIC's public sector business and moderate integration with the municipal budget. These factors indicate the high likelihood that CCIC would receive extraordinary government support, if needed. CCIC is classified as a credit-linked public-sector entity under Fitch's criteria. Chengdu's Creditworthiness: Chengdu is the capital city of Sichuan province, located in the heart of mid-west China. The central Chinese government has projected Chengdu, together with Chongqing, as the two municipalities in the western China that bear great potential for economic development. Chengdu achieved gross regional product (GRP) growth of 7.7% in 2016, outperforming the national average by 1.0%. The city ranked eighth among all 333 Chinese municipalities by GRP in 2016. Legal Status Mid-Range: CCIC is registered as a wholly state-owned limited liability company under Chinese company law and is directly owned and supervised by the Chengdu State-Owned Assets Supervision and Administration Commission. The legal status is assessed at mid-range because legally speaking, CCIC can file for bankruptcy and employees are not civil servants. Strategic Importance Stronger: CCIC is the sole public-sector entity (PSE) responsible for developing the municipality's toll-road network and investing equity on behalf of Chengdu in railways and the new Tianfu international airport, making it the municipality's only comprehensive transportation PSE. Chengdu is mid-western China's transportation hub and is expanding its transportation network under China's 13th Five-Year plan. Tight Control, Supervision: CCIC is wholly owned and directly controlled by the Chengdu State-Owned Assets Supervision and Administration Commission, which closely monitors its financing plan and debt level, according to CCIC. CCIC says that under the company's current investment management guidelines, it requires government approval for the development of transportation networks and its board members, except for employee representatives, are appointed or nominated by the government. Integration Mid-Range: CCIC has received capital injections, operating and construction project subsidies from the Chengdu government. Part of its debt is also included in the local-government debt-swap programme. Fitch believes capital injections are likely to continue due to the capital-intensive investment plans of Chengdu's multiple transportation projects. RATING SENSITIVITIES Linkage with Municipality: Stronger or more explicit commitment of support from the Chengdu government may trigger positive rating action on CCIC. Significant changes to CCIC's strategic importance, diluted municipal shareholding and/or lower explicit and implicit governmental support could cause the rating gap between CCIC and Chengdu to widen. Municipality's Creditworthiness: An upgrade of Fitch's internal credit view on Chengdu may trigger positive rating action on CCIC. A weaker fiscal performance or higher municipal indebtedness could cause us to lower our internal assessment of Chengdu's creditworthiness and thus trigger negative rating action on CCIC. Contact: Primary Analyst Lorraine Liu Analyst +852 2263 9929 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 Guilhem Costes Senior Director +34 93 323 8410 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. 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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. 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