Fitch rates Anhui Transportation bond BBB+

Fitch Ratings said it assigned long-term foreign-currency and local-currency issuer default ratings of BBB+ Anhui Transportation Holding Group Co. Ltd.

Fitch also said it assigned an expected BBB+ rating to the proposed dollar-denominated senior unsecured bond to be issued by fully-owned entity Anhui Transportation Holding Group (H.K.) Ltd.

The outlook is stable.

The proceeds will be used for general corporate purposes, Fitch said.

The ratings are credit-linked, but not equalized with the agency’s internal credit assessment of Anhui province, Fitch said.

The strong linkages are evident in the province’s 100% ownership of the company and oversight of its financials, financial support provided to the company by the province and via its transportation department and overall strong strategic importance of company’s operations to the province, the agency said.

The parent company granted a keepwell and liquidity support deed and a deed of equity interest-purchase undertaking for the proposed bond to ensure the subsidiary has sufficient assets and liquidity to meet its obligations, the agency said.

The bond is rated at the same level as the parent company’s issuer default ratings because the deeds transfer the ultimate responsibility of payment to the parent, Fitch said.

The group’s expressways are important parts of the logistic infrastructure of Anhui, a province that is a gateway for inland-bound economic activity due to its strategic location, the agency said. Anhui had the largest cargo transportation volume during the first 11 months of 2014 among China’s provinces, Fitch added.

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