Fitch rates China Hongqiao notes BB

Fitch Ratings said it assigned China Hongqiao Group Ltd.'s (BB/positive) proposed senior notes an expected BB rating.

Proceeds will mainly be used for the expansion of production capacity, refinancing debt and general corporate purposes.

Hongqiao's ratings are supported by its stable profitability and cash generation, a result of its power and alumina cost advantages over Chinese peers, and by its low financial leverage, the agency said.

Financial leverage, of adjusted net debt to operating EBITDAR over the past 12 months, remained below 1.0x at the end the first half.

The ratings are constrained by Hongqiao's operation concentration in Shandong province, the agency noted.

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