S&P rates Zhongrong notes BB-

S&P said it assigned a BB- long-term local-currency issue rating to the dollar-denominated notes issued by Zhongrong International Bond 2016 Ltd.

The agency also said it assigned a cnBB long-term Greater China regional scale rating to the notes.

The issuer is a special purpose company that Zhongrong International Holdings Ltd. fully owns, the agency said.

The ratings on the notes are equalized with the counterparty credit rating on Zhongrong International to reflect a view that the guarantee is irrevocable, unconditional and timely, S&P said, and qualifies for rating substitution treatment.

These obligations rank equally with all other unsecured and unsubordinated obligations of the guarantor except for certain obligations required to be preferred by law, S&P said.

The proceeds will be used for general corporate purposes.

The proposed issuance is quite sizable relative to the guarantor’s assets and very large relative to its equity size, the agency explained.

Zhongrong remains thinly capitalized and is susceptible to investment losses and valuation changes on its investment portfolio, S&P added

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