OREANDA-NEWS. Fitch Ratings has assigned Azure Orbit II International Finance Limited's (Azure Orbit II) proposed long-term senior unsecured notes an expected rating of 'A(EXP)'.

Azure Orbit II is an offshore special purpose vehicle managed by Bank of Communications Financial Leasing Co., Ltd (BOCOM Leasing; Issuer Default Rating (IDR) A/Stable), the wholly owned leasing arm of Bank of Communications Co., Ltd. (BOCOM; A/Stable). The company is among the largest lessors in China, with total assets of CNY114bn as of end-2014.

Azure Orbit II's notes will be issued under the issuer's existing USD1bn medium-term note (MTN) programme, which was rated by Fitch on 17 April 2014 and affirmed on 10 July 2015. The notes will have the benefit of a deed of guarantee given by BOCOM's Macau Branch in support of Azure Orbit II's MTN programme.

Azure Orbit II plans to use the proceeds of the notes for on-lending to BOCOM for general corporate purposes, including investments in BOCOM Leasing. The final ratings on the proposed notes are contingent upon the receipt of final documents conforming to information already received.

KEY RATING DRIVERS
The notes to be issued under the MTN programme represent direct, general, unconditional and unsecured obligations of BOCOM by virtue of the deed of guarantee given by the bank's Macau Branch in support of Azure Orbit II's MTN programme. Such obligations rank pari passu with all other present and future unsecured obligations of the Macau Branch.

BOCOM Leasing is strongly integrated with BOCOM and is a key subsidiary providing financial leasing services for the bank's customers. Fitch views the Macau Branch as part of the same legal entity and plays an important role in developing the bank's overseas businesses.

RATING SENSITIVITIES
Any changes to ratings on the programme and the notes issued under the programme will be directly correlated to changes in BOCOM's IDR, which in turn will reflect any shift in the perceived propensity or ability of China's government to support BOCOM in a full and timely manner. Should the deed of guarantee given by Macau Branch no longer be effective, then the rating on the programme could be downgraded.

BOCOM Leasing's Long-Term IDR of 'A' and Short-Term IDR of 'F1' are unaffected by this action. The Outlook remains Stable.

The other ratings of BOCOM are also unaffected by this action, and are as follows:
Long-Term IDR: 'A'; Outlook Stable
Short-Term IDR: 'F1'
Support Rating: '1'
Support Rating Floor: 'A'
Viability Rating: 'bb-'