Moody’s rates Power Construction securities Baa1

Moody’s Investors Service has assigned a Baa1 senior unsecured rating to the proposed backed senior perpetual securities to be issued by Sepco Virgin Ltd. and guaranteed by Power Construction Corp. of China, which Moody’s rates Baa1.

“Moody’s considers the proposed senior perpetual securities as 100% debt-like, despite the securities demonstrating certain hybrid-like features, such as the option of deferred coupons on a cumulative basis. Moody’s assessment is based on the securities having a high step-up cost of 300 basis points after the first call date in 2024, with the cost creating an incentive for the company to prepay the securities. Moody’s also estimates a low likelihood of PowerChina deferring the coupon, given the dividend suspension clause and the company’s strong access to funding,” said Moody’s in a press release.

Proceeds will be used for working capital, general corporate purposes and the financing of existing and new projects.

The outlook is negative.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.