Hong Kong, August 18, 2020 -- Moody's Investors Service has assigned A2 senior unsecured ratings to
two proposed USD senior unsecured notes to be issued by JIC Zhixin Limited,
a wholly-owned subsidiary of China Jianyin Investment Limited (JIC,
A2 stable). Both notes will be guaranteed by JIC.
JIC will use the proceeds from the proposed notes for refinancing and
general corporate purposes.
The outlook on the ratings is stable.
RATINGS RATIONALE
JIC's A2 issuer rating is primarily driven by the company's baa2 Baseline
Credit Assessment (BCA) and a three-notch uplift, based on
Moody's expectation of high level of support from and very high dependence
on the Government of China (A1 stable), in times of need.
This high support assessment is underpinned by JIC's (1) 100% ultimate
ownership by the Chinese government through China Investment Corporation
(CIC), (2) status as an important investment platform for the Chinese
sovereign wealth fund under CIC, (3) close links with the Chinese
government, and (4) strong track record of receiving government
support.
JIC's baa2 BCA is underpinned by its strong liquidity profile, as
well as prudent investment and financial management practices.
Moody's expects the company's leverage, as measured by estimated
market value-based leverage (MVL), to remain stable at around
24%-27% over the next 12-18 months.
Moody's expectation includes around RMB4-RMB5 billion in aggregate
equity investments in 2020-21. Moody's also expects that
JIC will receive cash dividends and interest of around RMB2.0-RMB2.5
billion and stable annual rental income of around RMB500 million from
its investment properties. As a result, its funds from operation
(FFO) interest coverage will stay at around 3.5x-4.0x
over the next 12-18 months.
This projected leverage level and the interest coverage are appropriate
for its BCA of baa2.
However, the company's BCA is constrained by (1) the credit contagion
risk from its major investees, (2) its evolving investment portfolio,
(3) the execution risks surrounding its new investments, and (4)
its high business and geographic concentration.
The A2 senior unsecured ratings of the proposed notes reflect the unconditional
and irrevocable guarantee from JIC.
The proposed notes will not materially increase JIC's overall debt
level, because part of the proceeds will be used to refinance the
company's existing debt.
The issuer rating also factors in JIC's low environmental and social risks.
In assessing JIC's governance risk, Moody's has considered its 100%
effective ownership by the Chinese government. JIC is under the
government's supervision and its management team is appointed by the government.
JIC has demonstrated prudent investment practices and sound risk management.
The company has refrained from expanding aggressively, despite its
abundant financial resources. Although JIC is unlisted, as
a domestic bond issuer it regularly discloses its financial information.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS
The stable outlook reflects Moody's expectation that: (1) over the
next 12-18 months, JIC's credit metrics will stay at levels
appropriate for its BCA, and (2) JIC's importance to the Chinese
government, and Moody's expectation that the government's ability
to provide support, which is in turn reflected in the stable outlook
on the sovereign rating, will remain intact.
Moody's could upgrade JIC's ratings if (1) the Chinese government's ability
to support the company through CIC strengthens, which would be illustrated
by an upgrade of China's sovereign rating , and (2) the company's
BCA improves.
The company's BCA could improve if there is lower-than-expected
credit contagion risk from its investees or execution risk from new investments,
and a material improvement in the business and geographic diversification
of its investment portfolio.
Credit metrics indicative of an improvement in the BCA include MVL consistently
below 10%-15% and FFO interest coverage above 5.0x,
both on a sustained basis.
Moody's would downgrade JIC's ratings if (1) the Chinese government's
ability to support the company weakens, which would be illustrated
by a downgrade of China's sovereign rating, (2) JIC's strategic
importance to CIC and the government weakens, or (3) the company's
BCA is lowered, which would arise because of aggressive debt-funded
investments or credit contagion risks from its investees.
Credit metrics indicative of a deterioration in the BCA include MVL above
25%-30% or FFO interest coverage below 2.5x-3.0x,
both on a prolonged basis.
The methodologies used in these ratings were Investment Holding Companies
and Conglomerates published in July 2018 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1125855,
and Government-Related Issuers Methodology published in February
2020 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1186207.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of these methodologies.
China Jianyin Investment Limited (JIC) is fully owned by China Investment
Corporation (CIC). JIC acts as CIC's important investment platform
and is supervised by China's Ministry of Finance as well as CIC.
JIC's investments include companies in the financial services, advanced
manufacturing, information technology, healthcare, cultural
and consumer products sectors.
The local market analyst for these ratings is Yan Li, +86 (106)
319-6572.
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
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and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1133569.
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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.
Gloria Tsuen, CFA
VP - Senior Credit Officer
Corporate Finance 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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Gary Lau
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Releasing Office:
Moody's Investors Service Hong Kong Ltd.
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