Moody’s gives China debt Baa1

Moody's Investors Service said it assigned a Baa1 senior unsecured debt rating to the proposed dollar-denominated senior perpetual capital securities to be issued by China Minmetals Corp. (Baa1 stable).

The outlook is stable.

Proceeds will be used for working capital and general corporate purposes, including the refinancing of existing debt.

Moody's said it considers the proposed senior perpetual capital securities as 100% debt-like, because the securities have a high step-up cost of 300 basis points after the first call date, and contain a dividend suspension clause that creates an incentive for the company to prepay the securities.

The agency said its assessment is despite the securities demonstrating certain hybrid-like features, such as the option of deferred coupons on a cumulative basis.

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