Fitch: China Metallurgical BBB

Fitch Ratings said it assigned a long-term foreign-currency issuer default rating of BBB and a senior unsecured rating of BBB to China Metallurgical Group Corp.

The outlook is stable.

Fitch also said it assigned a long-term foreign-currency issuer default rating to Metallurgical Corp. of China Ltd., along with a senior unsecured rating of BBB.

The outlook is stable.

China Metallurgical is rated one notch below China Minmetals Corp.'s long-term issuer default rating of BBB+ using the top-down approach in the agency’s rating criteria.

The linkage reflects their strong operational and strategic ties, Fitch explained.

Metallurgical Corp.’s ratings are equalized with those of its parent due to their strong legal, operational and strategic linkages, the agency added.

China Metallurgical has taken steps to speed up de-leveraging with an aim of reducing FFO-adjusted net leverage to 5x from 10x in 2012 through 2015, Fitch said.

The company started to generated positive free cash flow after disposing of two unprofitable subsidiaries in 2012, the agency said.

Fitch said it expects FFO-adjusted net leverage to remain at about 5x in 2016 and 2017, above the peer average of 2.5x.

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