Moody’s: Changchun notes Baa1

Moody's Investors Service said it assigned a Baa1 senior unsecured rating to the proposed dollar-denominated senior unsecured notes to be issued by Chang Development International Ltd., a wholly owned subsidiary of Changchun Urban Development Investment Holdings (Group) Co. Ltd.

The notes will be unconditionally and irrecoverably guaranteed by Changchun, Moody’s said.

The outlook is stable.

The proceeds will be used for general corporate and working capital purposes, the agency said.

The rating on the notes reflects the unconditional and irrevocable guarantee that will be provided by Changchun, as well as the baseline credit assessment of Baa3 on Chang Development, Moody’s said.

The baseline rating also has a two-notch uplift due to an expectation of high support from the Changchun municipal government, if needed, the agency added.

The assumption of support considers the company’s status as a commercial public sector local state-owned enterprise, Moody’s said.

The ratings are underpinned by its recurring incoming from the leasing of its water pipe network to the Changchun government and from its water utility business, the agency said.

The ratings are constrained by the company’s policy mandate in city construction, which requires high capital expenditure and, at times, is less commercially viable, Moody’s said.

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