Hong Kong, January 11, 2021 -- Moody's Investors Service, ("Moody's") has
assigned (P)A1/(P)P-1 local and foreign currency senior unsecured
medium-term note (MTN) programme ratings to Agricultural Bank of
China Limited (ABC), New York Branch.
Moody's has also assigned A1 ratings to the following proposed US-dollar
denominated senior unsecured notes to be issued by ABC, New York
Branch under ABC's USD15 billion MTN programme:
• 3-year fixed rate notes
• 5-year fixed rate green notes
The 3-year fixed rate notes and the 5-year fixed rate green
notes will be issued under ABC's USD15 billion MTN programme.
Particularly, the proceeds raised from the green notes will be used
for financing or refinancing of eligible green projects, including
renewable energy, clean transportation and sustainable water and
wastewater management.
The outlooks on the notes' rating and ABC, New York Branch are stable.
RATINGS RATIONALE
The USD15 billion MTN programme is now updated to include ABC, New
York Branch.
The (P)A1/(P)P-1 ratings are in line with ABC's long-term
and short-term deposit rating of A1/P-1.
The senior unsecured notes to be issued under the MTN programme will constitute
direct, general and unconditional obligations of the issuer that
will at all times rank pari passu among themselves and at least pari passu
with all other present and future unsubordinated and unsecured obligations
of the issuer. The notes will be redeemable at principal on maturity.
ABC's Baseline Credit Assessment (BCA) is baa2, and its Adjusted
BCA, which incorporates no affiliate support, is at the same
level as its BCA. China does not have an operational resolution
regime. Moody's therefore applies a basic Loss Given Failure approach
in rating the debt securities of Chinese banks.
The Preliminary Rating Assessment on the senior unsecured debt,
representing Moody's view of the expected loss on the senior unsecured
debt in the absence of government support and before considerations of
local and foreign currency country ceilings, is at the same level
as the Adjusted BCA. Moody's assesses that, in times of need,
ABC would receive a very high level of support from the Chinese government,
resulting in a four-notch uplift to the Preliminary Rating Assessment
on the senior unsecured debt to A1.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The ratings on the MTN programme and the proposed senior unsecured notes
are in line with ABC's long-term deposit rating. Any changes
in ABC's long-term deposit rating will lead to a similar rating
action on the rating of its senior unsecured MTN programme and senior
unsecured notes.
ABC's long-term deposit rating is already at the same level as
Government of China's senior unsecured debt rating and factors in a very
high level of government support. As such, Moody's could
upgrade ABC's rating if China's senior unsecured rating is upgraded.
Moody's could upgrade ABC's BCA if China's credit conditions improve with
strong economic recovery supported by a less intensive credit growth,
and the bank's (1) capitalization strengthens, with an improvement
in its Common Equity Tier 1 (CET1) ratio consistently above 11%,
(2) its NPL provision coverage ratio is consistently maintained at the
current level; (3) its assets and profitability are maintained at
around the current level consistently.
Conversely, Moody's could downgrade the long-term deposit
rating if the government's willingness or capability to support the bank
weakens.
Moody's could downgrade ABC's BCA if the operating environment weakens
significantly, for example, if China's economic growth moderates
further or corporate financial leverage continues to increase.
Moody's could also downgrade ABC's BCA if the bank's (1) profitability,
as measured by net income/tangible assets, reduced, which
could be a result of much weaker asset quality, and is consistently
below 0.5%; or (2) capitalization weakens, with
a deterioration in its CET 1 ratios to consistently below 9.5%-10%.
PRINCIPAL METHODOLOGY
The principal methodology used in these ratings was Banks Methodology
published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1147865.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
Agricultural Bank of China Limited, headquartered in Beijing,
reported total assets of RMB26.5 trillion as of 30 June 2020.
The bank is a global systemically important bank as designated by the
G-20's Financial Stability Board.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and sensitivity
analysis, see the sections Methodology Assumptions and Sensitivity
to Assumptions in the disclosure form. Moody's Rating Symbols and
Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security or pursuant
to a program for which the ratings are derived exclusively from existing
ratings in accordance with Moody's rating practices. For ratings
issued on a support provider, this announcement provides certain
regulatory disclosures in relation to the credit rating action on the
support provider and in relation to each particular credit rating action
for securities that derive their credit ratings from the support provider's
credit rating. For provisional ratings, this announcement
provides certain regulatory disclosures in relation to the provisional
rating assigned, and in relation to a definitive rating that may
be assigned subsequent to the final issuance of the debt, in each
case where the transaction structure and terms have not changed prior
to the assignment of the definitive rating in a manner that would have
affected the rating. For further information please see the ratings
tab on the issuer/entity page for the respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
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rating and, if applicable, the related rating outlook or rating
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The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the EU and is endorsed by
Moody's Deutschland GmbH, An der Welle 5, Frankfurt am Main
60322, Germany, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's office
that issued the credit rating is available on www.moodys.com.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the UK and is endorsed by
Moody's Investors Service Limited, One Canada Square, Canary
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The first name below is the lead rating analyst for this Credit Rating
and the last name below is the person primarily responsible for approving
this Credit Rating.
Ray Heung
Senior Vice President
Financial Institutions Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
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Client Service: 852 3551 3077
Yat Man Sally Yim, CFA
MD - Financial Institutions
Financial Institutions Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
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Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
