Moody’s gives Metallurgical Corp. of China notes Baa2

Moody’s Investors Service said it assigned a Baa2 rating to the subordinated perpetual securities issued by MCC Holding (Hong Kong) Corp. Ltd. and guaranteed by Metallurgical Corp. of China Ltd.

The proceeds will be used by Metallurgical Corp. to refinance debt and for general corporate purposes.

The outlook is stable.

The Baa2 rating reflects the guarantee from Metallurgical Corp., and that the securities will rank subordinated to the company’s senior unsecured obligations. The bonds will not materially increase debt leverage, because the company will primarily use the proceeds to refinance debt.

Moody’s said it considers the perpetual securities as 100% debt-like, due to the high step-up cost of 300 basis points after the first call date, with the cost creating a strong incentive for the company to prepay the securities.

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