Moody’s gives China Vanke notes Baa2

Moody's Investors Service said it assigned a Baa2 rating to the proposed dollar-denominated notes to be issued by Vanke Real Estate (Hong Kong) Co. Ltd. under its $7 billion medium-term note program (provisional Baa2).

The proposed notes will be supported by a deed of equity interest purchase undertaking and a keepwell deed between China Vanke Co., Ltd. (Baa1 stable) – which owns a 100% stake in Vanke Real Estate – Vanke Real Estate, and the bond trustee.

"The new issuance will improve China Vanke's debt maturity profile and will not materially affect the company's financial profile, because the proceeds will be used partially for refinancing," Moody's vice president and senior credit officer Kaven Tsang said in a news release.

The Baa2 rating for the notes and the provisional Baa2 rating for the medium-term note program incorporate a three-notch rating uplift from Vanke Real Estate's standalone credit strength, reflecting Moody's expectation that China Vanke will provide financial support to Vanke Real Estate in times of stress, and the absence of subordination risk for noteholders relative to the other creditors of Vanke Real Estate, the agency explained.

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