S&P rates Cnooc notes AA-

Standard & Poor's said it assigned an AA- rating and cnAAA Greater China regional scale rating to a proposed issue of dollar-denominated senior unsecured notes that Cnooc Ltd. irrevocably and unconditionally guarantees.

Cnooc Finance (2013) Ltd. will issue the notes.

Cnooc will use the proceeds for refinancing part of a $6 billion bridge loan for the acquisition of Nexen Inc.

The agency said it expects Cnooc's credit metrics to weaken in 2013, but will remain consistent with the rating. The company's debt increased by nearly $10 billion following the completion of its acquisition of Nexen, S&P said.

The company has budgeted sizable capital expenditure of about $12 billion to $14 billion for 2013, the agency added. It will continue to be acquisitive over the next few years to expand its reserve base, although the size of the acquisitions will be much smaller than that of Nexen, S&P said.

The ratings reflect the company's strong stand-alone credit profile and extremely high likelihood that the government of China will provide sufficient and timely extraordinary support to the company in the event of financial distress, the agency said.

The company's exposure to volatility in oil and gas prices, large capital expenditure plan and its increasing appetite for acquisitions moderate these strengths, S&P said.

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