S&P rates China Petrochemical notes A+

S&P said it assigned an A+ long-term issue rating and cnAAA long-term Greater China regional scale rating to a proposed issue of dollar-denominated fixed-rate notes for which China Petrochemical Corp. will guarantee.

Sinopec Group Overseas Development (2016) Ltd., a special purpose entity, will issue the notes.

The proceeds will be used to refinance existing debt and for general corporate purposes, S&P said.

The rating on the notes is the same as the A+ corporate credit rating on Sinopec Group because of credit substitution under the guarantee, the agency said.

Although Sinopec Group's ratio of priority claims to total assets could exceed the 20% notching threshold, the company's diverse businesses and operating assets held at the parent company mitigate the structural subordination risk associated with the debt at the holding company level, S&P explained.

The ratings reflect 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 extraordinary support to the group if needed, the agency said.

S&P said it believes Sinopec Group's integrated business model and expectation of lower oil-price volatility in 2016 will continue to support its refinery business.

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