S&P gives Beijing Construction, notes BBB

S&P said it gave BBB ratings to Beijing Construction Engineering Group Co. Ltd. and the planned dollar-denominated senior unsecured notes the company will guarantee. Special-purpose vehicle BCEG (Hong Kong) Co. Ltd. will issue the notes.

“The rating on BCEG reflects the company's strong market position, substantial scale, geographical concentration and high debt. In addition, we assess a high likelihood the Beijing municipal government would extend extraordinary support to the company, if needed. BCEG is one of the two major stated-owned construction companies headquartered in China's capital city, with about Chinese renminbi (RMB) 106 billion in annual turnover in 2020,” S&P said in a press release.

The agency said it considers BCEG a government-related entity since the Beijing municipal government directly and wholly owns the company through its state-owned assets supervision and administration commission.

“BCEG's revenue could grow 10%-15% annually in 2021 and 2022, slightly ahead of industry peers, with synergies post its merger with Beijing Municipal Road & Bridge (Bmrb) gradually materializing. Despite the pandemic, BCEG's new orders grew more than 20% to RMB 209 billion in 2020, equivalent to 2x of revenue, reflecting good growth prospects,” S&P said.

The outlook is stable.

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