S&P affirms Citic

Standard & Poor's said it affirmed the BBB- long-term and A-3 short-term foreign-currency counterparty credit ratings on Citic Group and the BBB- foreign-currency issue rating on its ¥10 billion bond due 2016.

S&P also affirmed the BBB- long-term and A-3 short-term counterparty credit ratings on Citic International Financial Holdings Ltd., Citic's 55.4%-owned Hong Kong-based subsidiary, and the BBB- issue rating on its $180 million convertible bond.

The outlook is positive.

The agency said it affirmed the ratings after Citic International announced that its wholly owned subsidiary Citic Ka Wah Bank Ltd. invested $340 million in the capital notes of four structured investment vehicles (SIV). The investment represents 16.8% of the bank's total investment portfolio and about 34.4% of its share capital.

S&P said the affirmations reflect its view that the potential loss from heavy exposure to the SIVs will not materially affect the continued improvement in the Citic group's profitability and asset quality.

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