S&P rates China Southern Power notes AA-

S&P said it assigned an AA- long-term issue rating and cnAAA long-term Greater China regional scale rating to the proposed dollar-denominated senior unsecured notes that China Southern Power Grid Co. Ltd. will unconditionally and irrevocably guarantee.

China Southern Power Grid International Finance (BVI) Co. Ltd. will issue the notes.

China Southern Power Grid International is an indirect wholly-owned subsidiary of China Southern Power Grid and was established for the purpose of debt issuance, S&P explained.

The proceeds will be used mainly for refinancing its existing HK$7.9 billion loan at its Hong Kong subsidiary, China Southern Power Grid International (HK) Co. Ltd.

The remaining amount will be used for general corporate purposes, S&P said.

The ratings reflect a view that the company's guarantee is unconditional and irrevocable and therefore qualifies for rating substitution treatment, the agency said.

The equalization also reflects an expectation that the company's geographical diversification and debt concentration could reduce structural subordination risk associated with the issuance, S&P said.

The notes will rank pari passu with all other senior unsecured debt of the issuer, the agency said.

The ratings also consider the company's A stand-alone credit profile and an opinion that there is an extremely high likelihood that the government of China will provide sufficient and timely extraordinary support to the company, if needed, S&P said.

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