OREANDA-NEWS. Fitch Ratings has assigned Beijing Infrastructure Investment Co Ltd's (BII; A+/Stable) proposed euro-denominated notes an expected rating of 'A+(EXP)'.

The notes will be issued under BII's USD2bn medium-term note (MTN) programme, which is rated 'A+'. The proceeds of the proposed issue will be used primarily for the development of the urban railway transit system in Beijing, as working capital and for general corporate purposes.

The final ratings on the proposed euro-denominated notes are contingent upon the receipt of final documents conforming to information already received.

KEY RATING DRIVERS - Euro-denominated Notes

The notes under the MTN programme will be issued by Eastern Creation II Investment Holdings Ltd, and are unconditionally and irrevocably guaranteed by Beijing Infrastructure Investment (Hong Kong) Limited (BII HK), a wholly owned subsidiary of BII. The notes under the MTN programme will be senior unsecured obligations of BII HK and rank pari passu with all other obligations of BII HK.

In place of a guarantee, BII has granted a keepwell and liquidity support deed and a deed of equity interest purchase undertaking to ensure that BII HK has sufficient assets and liquidity to meet its obligations under the guarantee for the notes under the MTN programme.

The notes under the MTN programme are rated at the same level as BII's Issuer Default Rating (IDR), given the strong link between BII HK and BII, and because the keepwell and liquidity support deed and deed of equity interest purchase undertaking transfer the ultimate responsibility of payment to BII.

In Fitch's opinion, both the keepwell and liquidity support deed and the deed of equity interest purchase undertaking signal a strong intention from BII to ensure that BII HK has sufficient funds to honour the debt obligations. The agency also believes BII intends to maintain its reputation and credit profile in the international offshore market, and is unlikely to default on its offshore obligations. Additionally, a default by BII HK could have significant negative repercussions on BII for any future offshore funding.

RATING SENSITIVITIES - Euro-denominated Notes

Any rating action on BII's IDR would result in similar rating actions on the MTN programme and the rated notes under the MTN programme.