Hong Kong, October 16, 2020 -- Moody's Investors Service has assigned a Baa3(hyb) foreign currency
rating to the USD-denominated senior unsecured perpetual notes
to be issued by China Everbright Limited (Baa3 stable).
RATINGS RATIONALE
The Baa3(hyb) senior unsecured rating is on par with China Everbright
Limited's Baa3 long-term issuer ratings, reflecting
the proposed bonds' seniority in the issuer's liability structure.
The perpetual notes constitute direct, unsubordinated, unconditional
and unsecured obligation of China Everbright Limited and shall at all
times rank pari passu and at least equally with all China Everbright Limited's
other present and future unsecured, unconditional and unsubordinated
obligations.
The rating also reflects the features of the senior perpetual securities
which will have optional and cumulative deferral, dividend payout
restrictions in the case of deferral and increase on distribution rate
in case of change of control, a breach of covenant event and a relevant
indebtedness default event.
FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATING
What could change the rating -- up
Since the note rating is on par with the company's issuer ratings,
an upgrade of China Everbright Limited's issuer ratings would result in
an upgrade of the note rating.
China Everbright Limited's issuer ratings could be upgraded if its standalone
assessment improves. Its standalone assessment could be raised
if the company (1) reduces its leverage materially and maintains debt-to-Moody's
adjusted EBITDA below 7.5x, (2) maintains the resilience
of its assets under management while improving its geographic and product
diversification, and (3) restores its pre-tax income margin
from the weakened level in 1H 2020, this maintaining its track record
of robust profitability, with a healthy pre-tax income margin
and stable revenue growth.
What could change the rating -- down
Since the note rating is on par with the company's issuer ratings,
a downgrade of China Everbright Limited's issuer ratings would also lead
to a downgrade of the note rating.
China Everbright Limited's issuer ratings could be downgraded if Moody's
lowers its assumption of support from the group, or if the ratings
of China Everbright Bank are downgraded.
China Everbright Limited's issuer ratings could also be downgraded if
its standalone assessment deteriorates materially. Its standalone
assessment could be lowered if (1) the company's scale and franchise erode
in China's alternative asset management sector, resulting in significantly
weaker resilience of its assets under management, (2) its profitability
deteriorates, which could be the result of lower revenue,
investment losses and/or higher volatility in investment performance with
pre-tax income margin narrows to below 15%, or (3)
debt-to-Moody's adjusted EBITDA sustains above 9.0x.
The principal methodology used in this rating was Asset Managers Methodology
published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1186105.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
Headquartered in Hong Kong, China Everbright Limited reported assets
of HKD85.4 billion as of the end of June 2020.
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_1133569.
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.
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.
Lan Wang, CFA
Analyst
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
