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Fitch Publishes Wuhan State-Owned Assets Management's 'A-' Rating; Rates Proposed USD Notes
December 4, 2017 / 2:54 AM / 11 days ago

Fitch Publishes Wuhan State-Owned Assets Management's 'A-' Rating; Rates Proposed USD Notes

(The following statement was released by the rating agency) HONG KONG, December 03 (Fitch) Fitch Ratings has published Wuhan State-Owned Assets Management Limited Company's (WSAM) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) at 'A-'. The Outlook is Stable. Fitch has also assigned WSAM's proposed senior unsecured US dollar notes an expected rating of 'A-(EXP)'. The notes will be directly issued by WSAM. The proposed notes will rank pari passu with all other WSAM's present and future unsecured and unsubordinated obligations. Proceeds will be used for general corporate purposes. The final ratings on the proposed US dollar notes are contingent upon the receipt of final documents conforming to information already received. KEY RATING DRIVERS Links to Wuhan Municipality: WSAM's ratings are credit linked to, but not equalised with, those of Wuhan municipality. This is reflected in 100% state ownership, strong government oversight of WSAM's financials and the strategic importance of the entity's operation to the government. These factors result in a high likelihood of extraordinary support, if needed. Therefore, WSAM is classified as a credit-linked public-sector entity under Fitch's criteria. Wuhan's Creditworthiness: Wuhan ranked within the top-10 of over 300 Chinese cities by gross regional product in 2016. The municipality reported strong fiscal performance, a diversified socioeconomic profile and a strategic location in the heart of central China. This is mitigated by a moderate level of contingent liabilities arising from public-sector entities. Legal Status Attribute Mid-Range: WSAM is registered as a state-owned limited liability company under Chinese company law and it is allowed to go bankrupt. Strategic Importance Attribute Stronger: WSAM is Wuhan government's flagship investment vehicle and represents around 30% of the revenue from all of Wuhan's public-sector entities. Its investment portfolio, which is invested in retail, financial services and strategic emerging industries, is aligned with the government's strategic objectives. Integration Attribute Mid-Range: WSAM's integration reflects the capital injections and subsidies made by the government. The government injected over CNY2 billion of capital into the company from 2014 to 2016, which represents 20% of its total asset growth. WSAM also received subsidies of around CNY128 million over the same period. Control Attribute Stronger: WSAM's board is mainly appointed by the government and its major projects require government approval. The company's financing plan and debt levels are closely monitored by the government and the company is required to report its operational and financial results. Standalone Profile: WSAM has a moderate leverage, with debt/EBITDA of below 5x in 2016. In addition, the government has provided monetary and non-monetary support to the company in the past due to the strategic links between WSAM and Wuhan Municipality, and Fitch believes that it would do so in the future in case of need. A full rating report on WSAM will be published shortly. RATING SENSITIVITIES Links with Sponsor: An upgrade of Fitch's internal assessment of the creditworthiness of Wuhan municipality may trigger positive rating action on the company. A significant weakening in WSAM's strategic importance to the government, dilution of the government's shareholding or lower government support may result in a downgrade. A downgrade may also stem from weaker fiscal performance or increased indebtedness of the government that leads to deterioration of its creditworthiness. Any change in the IDRs of WSAM will result in a similar change in the ratings of the proposed notes. 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 Christophe Parisot Managing Director +33 1 44 29 91 34 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. 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