Long-term financial news, September 7, Fitch to CCBL (Cayman) 1 Corporation Limited (referred to as "CCBL (Cayman) 1") to issue senior unsecured dollar bills "A (EXP)" expected rating. The note is issued under the CCBL (Cayman) 1 medium term Notes Programme.
The proposed note will benefit from the guarantee provided by CCB Leasing (International) Corporation Designated Activity Company ("CCBLI") and the support of the maintenance Agreement, liquidity support Agreement and Asset purchase commitment Agreement provided by Jianxin Financial Leasing Co., Ltd. (CCB Financial Leasing Corporation Limited, referred to as "Jianxin Financial Leasing", A / stable).
The proposed notes will be listed on the Hong Kong Stock Exchange and the funds raised will be used for refinancing and general corporate purposes. The term structure of the note will be determined after delivery. Its final rating will depend on the extent to which the final document received by Fitch is consistent with the information received. Fitch first awarded CCBL (Cayman) 1 a rating of $5 billion on May 31, 2016, and last confirmed it on May 27, 2021.
Key rating drivers
The expected rating of the proposed note is based on Fitch's view that Jianxin Financial Lease is highly likely to provide support for CCBLI and CCBL (Cayman) 1. The expected rating is consistent with Jianxin Financial Leasing's long-term issuer default rating of'A', which is driven by the parent bank, China China Construction Bank Corporation Co., Ltd. (China Construction Bank Corporation).
CCBL (Cayman) 1 is an overseas special purpose company (SPV) established by CCBLI. CCBLI is located in Ireland and is the main platform for overseas leasing business of Jianxin Financial Leasing. CCBLI was founded in 2014 and is wholly owned by CCB through CCB International Innovative Investment Limited. Jianxin Financial Leasing implements overall management and operation control of CCB International Innovative Investment Limited according to the service agreement signed with CCBLI.
The proposed notes will be based on unconditional and irrevocable guarantees provided by CCBLI and constitute direct, general and unsecured obligations of CCBLI. The proposed note will always be in at least the same order as all other unsecured obligations of CCBLI.
In view of the high integration of Jianxin Financial Leasing and CCBLI, Fitch believes that CCBLI can be strongly supported by Jianxin Financial Leasing. Since counterparties usually regard CCBLI as part of CCB Financial Leasing, Fitch believes that a default of the reviewed notes or CCBLI will pose significant reputational risks to CCB Financial Leasing and CCB.
In accordance with the maintenance Agreement and the Asset purchase commitment Agreement, Jianxin Financial Leasing will ensure that CCBLI and CCBL (Cayman) 1 have sufficient liquidity to pay off secured instrument obligations and maintain solvency and sustainability at all times. The purchase agreement is an important mechanism for Jianxin Financial Leasing to provide foreign currency liquidity to CCBLI, while the Weihao Agreement shows that Jianxin Financial Leasing has a strong willingness to provide support to CCBLI if necessary.
The rating of Jianxin Financial Leasing is based on Fitch's belief that the company, as a core subsidiary of CCB, is strongly supported by CCB. In addition, according to the regulations of Bank of China Ltd. Insurance Regulatory Commission and the articles of association of Jianxin Financial Leasing, CCB should provide liquidity and financial support to Jianxin Financial Leasing when needed.
Rating sensitivity
Factors that may alone or jointly cause Fitch to take negative rating action / downgrade include:
The expected rating of the secured notes to be issued by CCBL (Cayman) 1 will change to the same extent with the change in the rating of Jianxin Financial Leasing, which is related to CCB and China's sovereign credit rating. If there are signs that the correlation between CCBLI and CCB has weakened, or that between CCB and CCB has weakened, Fitch may downgrade its expected rating. This may include a significant reduction of the parent bank's shareholdings, or the parent bank loses its majority shareholder position and no longer has actual control over the subsidiary; changes in the legal obligations of CCB to provide capital and liquidity support to CCB in the articles of association of CCB Financial Leasing; or significant changes in the role of CCB Financial Leasing within the group or its business development seriously deviates from the overall strategic or policy functional role of CCB.
If any change seriously weakens the recovery prospects of bonds issued or guaranteed by overseas platforms, or if any regulatory change causes Jianxin Financial Lease to encounter practical difficulties in implementing the maintenance Agreement and the Asset purchase commitment Agreement, or in providing support to its overseas platforms, it may also trigger a downgrade of the notes to be issued.
Factors that may alone or jointly lead to positive rating actions / upgrades by Fitch include:
Unless there is a positive change in Fitch's view of China's sovereignty and CCB rating, Fitch is less likely to take positive rating action on CCB Financial Leasing.