S&P rates China Hongqiao notes BB

Standard & Poor’s said it assigned its BB long-term issue rating and cnBBB- long-term Greater China regional scale rating to a proposed issue of U.S. dollar-denominated senior unsecured notes by China Hongqiao Group Ltd. (Hongqiao: BB/stable/--; cnBBB-/--).

The company intends to use the issuance proceeds to refinance its existing short-term debt maturing within one year.

S&P said the rating on Hongqiao reflects the company’s exposure to a highly cyclical and volatile aluminum market and its debt-funded expansion. Hongqiao’s low production costs due to its self-owned captive power plants temper these weaknesses.

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