S&P rates Midea notes A-

S&P said it assigned an A- long-term issue rating and cnAA long-term Greater China regional scale rating to a proposed medium-term note program that Midea Group Co. Ltd. guarantees.

Midea Investment Development Co. Ltd., a special purpose vehicle that Midea wholly owns, will issue the notes, the agency said.

The agency also said it assigned an A- long-term foreign-currency issue rating and cnAA long-term Greater China regional scale rating to a proposed initial drawdown under the program.

The proceeds will be used for general corporate purposes.

S&P said it equalized the ratings on the notes with the corporate credit rating on Midea to reflect a view that the company’s guarantee is unconditional and irrevocable and therefore qualifies for rating substitution treatment.

The equalization also reflects an expectation that Midea’s extensive geographical diversification of assets and high cash balance owned by its parent company can reduce structural subordination risk associated with debt at the holding company level, the agency said.

The notes will rank equally with all other senior unsecured debt of Midea, S&P added.

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