S&P gives State Grid notes A+

S&P said it assigned its A+ long-term issue rating to the proposed notes offering by State Grid Overseas Investment (2016) Ltd., and to be guaranteed by parent State Grid Corp. of China, which S&P rates A+. State Grid will sell notes denominated in dollars and euros under a proposed $15 billion medium-term note program.

“The issue rating is the same as our issuer credit rating on SGCC, reflecting the effect of credit substitution and guarantee. We do not notch down the issue rating despite SGCC’s priority debt ratio being more than 50% as of end-2019. This is because we consider SGCC’s leverage to be low enough to limit the possibility of any lender being significantly disadvantaged in the event of a default,” S&P said in a press release.

Proceeds will be used to refinance debt as well as provide funding support to State Grid International Development Ltd. a wholly owned subsidiary of SGCC that carries out the utilities business in overseas markets. SGID recently acquired a Chilean utility company Chilquinta Energia SA for about $2.2 billion.

The outlook is stable.

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