China Jinmao Holdings# Guaranteed Subordinated Perpetual Securities Rated #BB# With Intermediate Equity Content

Stocks and Financial Services Press Releases Monday October 30, 2017 17:33
HONG KONG--30 Oct--S&P Global Ratings

HONG KONG (S&P Global Ratings) Oct. 30, 2017--S&P Global Ratings today assigned its 'BB' long-term issue rating to proposed U.S. dollar-denominated subordinated perpetual securities that Franshion Brilliant Ltd. will issue. China Jinmao Holdings Group Ltd. (BBB-/Stable/--) guarantees the securities. We also view the issue to have intermediate equity content. We will treat 50% of the principal of the securities as debt and 50% of the distributions as interest. The rating is subject to our review of final issuance documentation.

China Jinmao intends to use the proceeds for refinancing bank loans due in 2018 and other general corporate purposes. The ratings on China Jinmao and its outstanding senior notes are not affected as we expect the company's leverage will remain under control.

The securities will rank subordinated to other unsecured and unsubordinated obligations of China Jinmao. Distributions are optionally deferrable at the issuer's discretion. We rate the securities two notches below China Jinmao's 'BBB-' issuer credit rating, reflecting the subordinated status and optional deferability.

The securities will pay a fixed distribution rate until the first reset date in the sixth year. The distribution rate will be reset in 2023 based on the prevailing U.S. five-year Treasury rate plus an initial credit spread. The credit spread above the Treasury rate will step up by 25 basis points on the second reset date in 2028 and by an additional 75 basis points in 2043. Therefore, we expect the intermediate equity content to remain until 2023, or earlier, should we reassess management's intent as no longer supportive.

While the issue does not have a legally binding replacement provision, we believe management intends to replace the perpetual securities with similar equity-like instruments. We view China Jinmao's ongoing issuance of new hybrids as a sign of management's commitment to maintain hybrid capital as a permanent feature of the company's capital structure. We could lower our assessment of the equity content on the proposed securities to minimal if the company indicates any deviation from its replacement intention. A minimal equity content means we would treat the full principal of the securities as debt and all the distributions as interest expenses.

Latest Press Release

KTC invites book lovers to enjoy Big Bad Wolf Book Sale Chiang Mai 2018.

"KTC" or Krungthai Card Public Company Limited in cooperation with Ready To Read Company Limited give privilege to KTC cardmembers in Chiang Mai and its nearby provinces to enjoy the book fair "Big Bad Wolf Book sale Chiang Mai 2018" with more than 1...

KBank and CENTRAL Group launch K DAY Hey DAY@CENTRAL I ZEN campaign

To promote K-Credit Card as the "Lifestyle Credit Card" under the One Card for Use Every Day Concept, KBank has teamed up with a retail giant CENTRAL Group to unveil the "K DAY Hey DAY@CENTRAL I ZEN" special campaign to please every K-Credit Cardholder....

Siam Commercial Bank and SCB Abacus announces success of AI-powered lending platform for SMEs on Lazada to capture booming e-commerce trend

The new solution marks Thailand's first e-marketplace end-to-end digital lending platform and reinforces SCB's industry leadership Siam Commercial Bank (SCB) announces the success of "Clickcash" (Mae Manee Sri Online), Thailand's first end-to-end...


The FinLab announced the launch of its Smart Business Transformation Programme to help Thailand-based small- and medium-sized enterprises (SMEs) transform their businesses through digital solutions. The programme is supported by United Overseas Bank...

Photo Release: KBank teams up with PTTOR to offer first KBank Service at Cafe Amazon, PTT Service Station (Ekamai-Ramintra)

Ms. Jiraporn Khaosawas (1st from left), Chief Executive Officer and Managing Director of PTT Oil and Retail Business PCL. (PTTOR), and Mr. Patchara Samalapa, KBank President, recently introduced "KBank Service" or deposit service at Cafe Amazon, PTT...

Related Topics