Moody’s rates PowerChina securities A3

Moody's Investors Service said it assigned a provisional A3 rating to the senior guaranteed perpetual securities to be issued by Dianjian Haixing Ltd. and guaranteed by Power Construction Corp. of China (PowerChina, A3 stable).

At the same time, the agency affirmed PowerChina’s A3 issuer rating.

The outlook is stable.

Proceeds will be used for the financing of the company's overseas investment projects, as overseas working capital and for overseas general corporate purposes.

"The perpetual securities will provide additional funding and enhance PowerChina's liquidity position, without substantially weakening its credit metrics," Moody's vice president and senior analyst Chenyi Lu said in a news release.

The proposed securities have hybrid-like features, defer coupons on a cumulative basis and offer no put options to investors. Moody's said it considers PowerChina's proposed perpetual securities as 100% debt-like securities because the securities have a high step-up cost and a dividend suspension clause that could pressure the company to prepay the securities.

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