Moody’s: Shanghai International Port bond A2

Moody's Investors Service said it assigned an A2 backed senior rating to the proposed dollar exchangeable bond to be issued by Shanghai Port Group (BVI) Holding Co., Ltd., which is 100% owned by Shanghai International Port Group (HK) Co. Ltd. The outlook is stable.

The bond will be exchangeable into the H-shares of Postal Savings Bank of China Co., Ltd. and will be guaranteed by SIPG HK (Guarantor), which, in turn, is wholly owned by Shanghai International Port (Group) Co., Ltd. (A1/stable).

Proceeds will be used to refinance debt and for general corporate purposes.

The A2 bond rating is supported by the guarantor's status as the primary overseas platform for the investment holding and offshore financing of Shanghai International Port and by the reputational damage to Shanghai International Port and the Shanghai municipal government should the issuer fail to honor its obligations under the proposed bond, Moody’s said.

Shanghai International Port has a unique position as the dominant operator of the Port of Shanghai, the largest container port both in China and globally, and strong credit fundamentals, including moderate financial leverage, the agency said.

On the other hand, Moody’s said the company has a more aggressive financial policy, and its ratings also consider the slowdown in throughput growth and the weaker margins of its port operations in view of a challenging environment.

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