(The following was released by the rating agency)
HONG KONG (Standard & Poor's) Oct. 8, 2012--Standard &Poor's Ratings Services today assigned its 'B' issue rating to aproposed issue of U.S. dollar-denominated senior unsecured notesby China Tianrui Group Cement Co. Ltd. (B+/Stable/--; cnBB/--).At the same time, we assigned our 'cnBB-' Greater China regionalscale rating to the proposed notes. The rating on the notes issubject to our review of the final documentation for the notesissuance.
The proposed issue is rated one notch lower than thecorporate credit rating on Tianrui because of priorityliabilities at its operating company in China. Tianrui will usethe proceeds from the proposed notes to refinance debt and forgeneral corporate purpose.
The proposed issuance does not affect the rating on Tianrui.The company's financial performance in the first half of 2012was in line with our expectation, with an operating margin ofabout 20%. We expect the operating margin to stay above 20% inthe next 12 months as large national infrastructure projects,such as the South-North Water Transfer Project, fuel demand.
The rating on Tianrui reflects the company's untestedcorporate governance, short track record, heavy reliance uponshort-term debt to support its capital structure, and aggressivegrowth plans. We also note that Tianrui operates in acompetitive, cyclical, and capital-intensive industry, which webelieve is in a weak cycle. The company's operating scale,reasonable geographic diversification, and relatively efficientoperations due to vertical integration temper the weaknesses.(For details, see our summary analysis published Oct. 8, 2012,on RatingsDirect on the Global Credit Portal.)
RELATED CRITERIA AND RESEARCH
-- Summary Analysis: China Tianrui Group Cement Co. Ltd.,Oct. 8, 2012
-- Methodology And Assumptions: Liquidity Descriptors ForGlobal Corporate Issuers, Sept. 28, 2011
-- Key Credit Factors: Business And Financial Risks In theGlobal Building Products And Materials Industry, Nov. 10, 2008
-- 2008 Corporate Criteria: Analytical Methodology, April15, 2008
Keywords: MARKETS RATINGS CHINATIANRUI