Fitch rates Yunnan notes BBB+

Fitch Ratings said it published long-term foreign- and local-currency issuer default ratings of BBB+ on Yunnan Provincial Investment Holdings Group Co. Ltd.

The outlook is stable.

Fitch also assigned an expected rating of BBB+ to the company’s proposed senior unsecured dollar-denominated notes.

The notes will be issued directly by the company and rank pari passu with all other obligations, the agency said.

The ratings are credit linked to the Yunnan province, Fitch said, due to the company’s 100% state ownership, strong provincial oversight on its financial metrics and strategic importance of the entity’s operation to the entire province, Fitch said.

These factors result in a likelihood of extraordinary support from the provincial government, if needed, the agency said.

The province has a healthy budget underpinned by strong central government support via China’s robust fiscal equalization system, Fitch said.

The strengths partially mitigate its moderate standalone fiscal strength and rapidly rising provincial government debt, the agency added.

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