(The following was released by the rating agency)
HONG KONG (Standard & Poor's) Oct. 8, 2012--Standard &Poor's Ratings Services today assigned its 'BB+' rating to anupsized US$4.5 billion medium-term notes program of CITICPacific Ltd. (BB+/Negative/--; cnBBB/--). The original size ofthe program was US$2.0 billion. At the same time, we assignedour 'BB+' issue rating to a proposed benchmark size seniorunsecured notes issuance under this program. We have alsoassigned our 'cnBBB' Greater China regional scale rating to boththe program and the proposed notes. We expect CITIC Pacific touse the proceeds from the proposed notes to refinance borrowingsdue in 2013.
We anticipate that the company's debt will increase by theend of 2012, with its ratio of total debt to total capitalreaching close to 60% as it pre-finances debt maturities in2013. In our view, the key risk to the rating on CITIC Pacificremains the execution of the construction of the Sino Ironproject in Western Australia and whether the company can startthe first production line soon.
The rating on CITIC Pacific reflects the conglomerate's weakexecution record. The company's highly leveraged capitalstructure and its exposure to cyclical industries such as ironore, real estate, and special steel also constrain the rating.Strong parent support and CITIC Pacific's diversified assetsacross industries temper these weaknesses.
RELATED CRITERIA AND RESEARCH
-- 2008 Corporate Criteria: Analytical Methodology, April15, 2008
-- 2008 Corporate Criteria: Ratios And Adjustments, April15, 2008
-- Rating Methodology For European Investment Holding AndOperating Holding Companies, May 28, 2004
Keywords: MARKETS RATINGS CITICPACIFIC