Hong Kong, January 11, 2021 -- Moody's Investors Service ("Moody's") has assigned
Baa2 foreign currency rating to the proposed USD- denominated senior
unsecured bond to be issued by Shanghai Pudong Development Bank Co.,
Ltd. (SPD Bank), Singapore Branch.
The bonds will be issued under SPD Bank's USD5 billion medium-term
note (MTN) program.
The outlook on the senior unsecured bond rating is stable.
RATINGS RATIONALE
The Baa2 senior unsecured bond rating and stable outlook are in line with
SPD Bank's long-term deposit rating and outlook, and reflect
the structure of the proposed issuance.
The senior unsecured bond will constitute a direct, general,
unsubordinated, unconditional, and unsecured obligation of
the issuer. The bond will be redeemable at principal on maturity.
SPD Bank's standalone Baseline Credit Assessment (BCA) is ba2.
Its Adjusted BCA, which incorporates no affiliate support,
is at the same level as its BCA.
China does not have an operational bank resolution regime. Therefore,
Moody's applies a basic Loss Given Failure approach in rating Chinese
banks' securities.
The Preliminary Rating Assessment on senior unsecured bond, representing
Moody's view of the expected loss of the senior unsecured bond in
the absence of government support and before considerations of country
ceilings, is at the same level as the Adjusted BCA.
Moody's assesses that, in times of need, SPD Bank would
receive a very high level of Chinese government support, uplifting
the Preliminary Rating Assessment by three notches to Baa2 for the senior
unsecured bond.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
The rating of the senior unsecured bond is in line with SPD Bank's deposit
rating. Any changes in SPD Bank's deposit rating will lead to a
similar rating action on the senior unsecured bond.
There could be upward pressure on SPD Bank's deposit rating and the rating
of the senior unsecured bond should the Chinese government (A1 stable)'s
capability or willingness to support the bank strengthens.
The bank's BCA could experience upward pressure if the bank's (1) asset
quality, as measured by the rate of formation of problem loans,
improves; (2) profitability, as measured by the return on assets,
remains resilient; (3) capital strengthens further, as a result
of capital raising and sound growth in RWA, with an improvement
in its tangible common equity ratio; and (4) reliance on market funding
decreases, with an improvement in its market funds/tangible banking
assets.
There could be downward pressure on SPD Bank's deposit rating and the
rating of the senior unsecured bond should the Chinese government's
capability or willingness to support the bank weakens.
SPD Bank's BCA could experience downward pressure if the bank's (1) asset
quality deteriorates; (2) capital position weakens because of rapid
asset growth; or (3) reliance on market funding increases,
or all.
The principal methodology used in this rating 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.
Shanghai Pudong Development Bank Co., Ltd. is headquartered
in Shanghai. It reported assets totaling RMB7.7 trillion
as of 30 September 2020.
The local market analyst for this rating is Yulia Wan, +86
(212) 057-4017.
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 rating has been disclosed to the rated entity or its designated agent(s)
and issued with no amendment resulting from that disclosure.
This rating is solicited. Please refer to Moody's Policy
for Designating and Assigning Unsolicited Credit Ratings available on
its website www.moodys.com.
Moody's considers a rated entity or its agent(s) to be participating
when it maintains an overall relationship with Moody's. Unless
noted in the Regulatory Disclosures as a Non-Participating Entity,
the rated entity is participating and the rated entity or its agent(s)
generally provides Moody's with information for the purposes of
its ratings process. Please refer to www.moodys.com
for the Regulatory Disclosures for each credit rating action under the
ratings tab on the issuer/entity page and for details of Moody's
Policy for Designating Non-Participating Rated Entities.
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 https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.
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
rating agencies in the UK. Further information on the UK endorsement
status and on the Moody's office that issued the credit rating is
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.
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.)
JOURNALISTS: 852 3758 1350
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
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
