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Rating Action:

Moody's assigns Baa2 to Tianjin Binhai New Area Cons & Invt Group Co.'s guaranteed notes

 The document has been translated in other languages

05 Jul 2019

Hong Kong, July 05, 2019 -- Moody's Investors Service has assigned a Baa2 senior unsecured rating to the proposed notes to be issued by Zhaobing Investment (BVI) Limited and guaranteed by Tianjin Binhai New Area Cons & Invt Group Co. (TBCI, Baa2 stable).

The rating outlook is stable.

Proceeds of the issuance will be used to refinance existing debt and for general corporate purposes.

RATINGS RATIONALE

The Baa2 senior unsecured rating on the proposed notes reflects the unconditional and irrevocable guarantee from TBCI.

"TBCI's Baa2 issuer rating is primarily driven by our assessment of a high likelihood of support from and high level of dependence on the Tianjin city government and ultimately the Government of China (A1 stable) when in need, which provides a five-notch uplift to the company's final rating," says Chenyi Lu, a Moody's Vice President and Senior Credit Officer.

"This support assessment reflects TBCI's dominant role in the development and operation of the Binhai New Area in Tianjin, 100% ownership by the Tianjin government, and the track record of government support," adds Lu, also Moody's International Lead Analyst for TBCI.

Moody's assessment of a high level of high dependence reflects the fact that TBCI and the central government are exposed to common political and economic event risks.

TBCI's standalone credit profile is captured by its b1 Baseline Credit Assessment (BCA), which primarily reflects its business diversification, the regular government cash payments it receives for its public policy activities, and its proven access to domestic funding.

On the other hand, TBCI's BCA is constrained by its high geographic concentration in the Binhai New Area and its weak profitability and cash flow generation capability.

Part of the proceeds from the proposed notes will be used to refinance existing debt. Accordingly, this issuance will improve TBCI's liquidity and debt maturity profile, while it will not materially increase TBCI's overall debt level.

The Baa2 rating on the proposed notes is not affected by subordination to claims at the operating company level because, despite the guarantor's status as a holding company, Moody's expects government support to flow through the holding company rather than flowing directly to its main operating companies. This situation will mitigate any differences in expected loss that could result from structural subordination.

The stable outlook reflects (1) the stable outlook on China's sovereign rating; and (2) the consideration that TBCI's BCA will remain appropriately positioned at the current level.

The rating could be upgraded if (1) the likelihood of support for TBCI increases; (2) TBCI's standalone credit profile improves significantly; or (3) the company's business or financial profile improves. Credit metrics indicative of upward pressure on its BCA include adjusted (funds from operations (FFO) from non-government transactions + government cash payments + interest)/interest exceeding 2.0x on a sustained basis.

The rating could be downgraded if (1) the likelihood of support for TBCI decreases; (2) TBCI's standalone credit profile weakens meaningfully; or (3) there is a material deterioration in its business or financial profiles. Credit metric indicative of a potential downgrade of the BCA include adjusted (FFO from non-government transactions + government cash payments + interest)/interest falling below 1.0x on a sustained basis.

The methodologies used in this rating were Business and Consumer Service Industry published in October 2016, and Government-Related Issuers published in June 2018. Please see the Rating Methodologies page on www.moodys.com for a copy of these methodologies.

Established in 2006, Tianjin Binhai New Area Construction & Investment Group Co., Ltd. is an investment and financing platform incorporated in Tianjin. It is wholly owned by the Tianjin State-Owned Assets Supervision and Administration Commission and operates under the supervision of the Tianjin Binhai New Area Government.

The local market analyst for this rating is Yuting Liu, +86 (10) 6319-6530.

REGULATORY DISCLOSURES

For ratings issued on a program, series or category/class of debt, this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series or category/class of debt 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.

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.

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.

Chenyi Lu
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.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

Gary Lau
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077

Chris Park
Associate Managing Director
Corporate Finance 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

No Related Data.
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