Hong Kong, January 11, 2022 -- Moody's Investors Service has assigned A1 ratings to the following proposed
US dollar-denominated senior unsecured notes to be issued by the
Agricultural Bank of China Limited (ABC, A1 stable), New York
Branch.
• 3-year fixed rate notes
• 5-year fixed rate green notes
These notes will be issued under ABC's $15 billion medium-term
note (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 outlook on the ratings is stable.
The assigned ratings are subject to receipt of final documentation,
the terms and conditions of which are not expected to change in any material
way from the draft documents that Moody's has reviewed.
RATINGS RATIONALE
The assigned ratings and stable outlook are in line with ABC's long-term
deposit rating and outlook, reflecting the structure of the issuance
and the fact that ABC, New York Branch forms part of the same legal
entity as ABC.
The senior unsecured notes to be issued under the MTN programme will constitute
direct, unconditional, unsubordinated and unsecured obligations
of the issuer. The notes will at all times rank pari passu among
themselves and pari passu with all other present and future unsecured
and unsubordinated obligations of the issuer.
ABC's Baseline Credit Assessment (BCA) is at 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 deposits, representing Moody's
view of the expected loss on deposits in the absence of government support
and before considerations of deposit 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 deposits to A1.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The senior unsecured note ratings are in line with ABC's long-term
deposit rating. Therefore, an upgrade/downgrade of ABC's
long-term deposit rating would cause a similar rating action on
the senior unsecured note ratings.
ABC's long-term deposit rating is already at the same level as
Government of China's sovereign rating and factors in a very high level
of government support. As such, Moody's could upgrade ABC's
rating if China's sovereign rating is upgraded.
Moody's could upgrade ABC's BCA if credit conditions in China improve,
with a strong economic recovery, supported by less intensive credit
growth. An upgrade is also possible if the bank's financial
metrics improve, including a tangible common equity (TCE)/risk weighted
assets (RWA) ratio above 11% and net income/tangible assets above
1.0% on a sustained basis. In addition, the
bank will have to maintain its high nonperforming loan provision coverage,
as well as strong liquidity and funding profiles.
Conversely, Moody's could downgrade ABC's 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 bank's operating environment
weakens significantly; for example, if China's economic growth
moderates or corporate financial leverage increases substantially.
In addition, Moody's could downgrade ABC's BCA if the bank's
profitability weakens significantly, with net income/tangible assets
consistently below 0.5%, or its capitalization weakens,
with TCE/RWA consistently below 9.5%.
The principal methodology used in these ratings was Banks Methodology
published in July 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1269625.
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 RMB28.7 trillion as of 30 June 2021.
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.
The ratings have been disclosed to the rated entity or its designated
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These ratings are solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
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Moody's considers a rated entity or its agent(s) to be participating
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for the Regulatory Disclosures for each credit rating action under the
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Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at http://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1288235.
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 Wharf, London E14 5FA under the law applicable to credit
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available on www.moodys.com.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
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.
David Jinhua Yin
VP - Senior Credit Officer
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.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Chen Huang
Associate Managing Director
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
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
