Fitch Assigns Zhuhai Huafa's CNY Bonds Final 'BBB'
The assignment of the final ratings follows the receipt of documents conforming to information already received. The final ratings are in line with the expected ratings assigned on 22 July 2015.
KEY RATING DRIVERS
The bond will be unconditionally and irrevocably guaranteed by Zhuhai Huafa Group Co., Ltd (Zhuhai Huafa). Huarui is an indirect wholly owned subsidiary of Zhuhai Huafa.
The bonds constitute direct, unconditional, unsubordinated and unsecured obligations of Huarui and shall at all times rank pari passu with its other unsecured and unsubordinated obligations and without any preference among themselves.
The bond is rated at the same level as Zhuhai Huafa's Issuer Default Rating (BBB/Stable) because the direct guarantee structure transfers the ultimate responsibility of payment to Zhuhai Huafa.
Zhuhai Huafa's ratings are credit linked to Zhuhai Municipality. This is reflected in the municipality's 100% ownership, strong municipal oversight of its financials, and the strategic importance of Zhuhai Huafa's public sector business to the municipality. Fitch believes these factors result in a high certainty of extraordinary support from the municipality, if needed.
Zhuhai Huafa is primarily engaged in urban operation, financial services and property development. Zhuhai Huafa plays an important role in implementing the government's blueprint for urban planning and development. It also plays a major part in assisting the municipality to develop large-scale urban-development projects such as the Shizimen Central Business District (SCBD) and subsidised housing projects.
Zhuhai Huafa has received around CNY12bn in capital from Zhuhai municipal government since 2010 to support its operations in urban infrastructure development.
RATING SENSITIVITIES
Any rating action on Zhuhai Huafa's IDR would result in similar rating action on the rated bonds.
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