S&P upgrades Citic

Standard & Poor's said it raised the long- and short-term foreign-currency counterparty credit ratings of Citic Group to BBB-/A-3 from BB+/B and the long-term foreign-currency issue rating on the group's ¥10 billion bond due 2016 to BBB- from BB+.

The agency also upgraded Citic Resources Holdings Ltd.'s corporate credit rating to BB+ from BB, upgraded Citic Resources Finance (2007) Ltd.'s $1 billion seven-year senior unsecured notes to BB+ from BB, affirmed Citic International Financial Holdings Ltd.'s BBB- long-term and A-3 short-term counterparty ratings and affirmed CIFH (CB-I) Ltd.'s BBB- $180 million convertible bonds.

The ratings of Citic Group and Citic Resources were removed from CreditWatch, where they were placed with positive implications on May 15. The outlook is positive for Citic Group and Citic International Financial and stable for Citic Resources.

"The rating action follows Standard & Poor's reassessment of the group's business strategy and a review of the financial profile of its non-financial services operations," S&P credit analyst Qiang Liao said in an agency rating.

"The upgrade reflects Citic's significantly improved financial profile stemming from the strengthened capital position of its banking operations, the sale of 50% of its oil assets in Kazakhstan, and the encouraging turnaround of both its banking and non-banking operations."

The agency predicted that Citic's uncomfortably high financial leverage is likely to significantly decline over the next two years.

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