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CITIC Pacific's senior unsecured notes get 'BB+' from S&P

Standard & Poor's assigned its 'BB+' rating to the proposed senior unsecured notes of CITIC Pacific Ltd.


The notes are under the company's US$2.0 billion medium-term notes program. S&P also assigned our 'cnBBB' Greater China scale credit rating to the proposed issue.

The ratings group expects CITIC Pacific to use the proceeds from the proposed notes for the group's general purposes, including financing the construction of Sino Iron, a project in Australia, and refinancing of existing debt.

The corporate credit rating on CITIC Pacific is not affected by the proposed issue because S&P expects the company's leverage to increase in 2012 to fund its iron ore mining project in Australia.

The company's financial performance in 2011 was broadly within S&P's expectation.

&P also feels that CITIC Pacific has some flexibility to moderate the increase in leverage by using its large cash balance and proceeds from asset sales to partly fund capital expenditure. As of Dec. 31, 2011, the company's ratio of adjusted debt to capital is 53.3% compared with 53.5% a year earlier.

CITIC Pacific's liquidity is regarded as "adequate," as defined in S&P's criteria. The assessment is based on the company's high cash balance and available banking facilities. As of Dec. 31, 2011, the group has cash and deposits of Hong Kong dollar 30.9 billion.

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