S&P Global Ratings has assigned a BBB+ long-term issue rating to a proposed drawdown of the medium-term note (MTN) program of CITIC Ltd (BBB+/Stable/–), a core subsidiary of CITIC Group Corp.
CITIC announced a two-tranche bond offering of a benchmark-sized issue on Tuesday. The five-year bond has an initial price guidance of 150 basis points over US Treasuries while the 10-year security has been indicated at a 170 bps premium, sources close to the deal told Asia Times. By early afternoon the bond had already attracted orders in excess of $5 billion, they said.
CLSA, HSBC and Morgan Stanley are handling the issue.
“We expect CITIC Ltd. to use the issuance proceeds for general corporate purposes, including refinancing its outstanding debt,” the rating agency said in a statement.
“Despite a significant amount of priority debt in CITIC Ltd.’s capital structure, we believe the risk of subordination is mitigated by our view that the government may intervene in a bankruptcy process. We see a very high likelihood that the Chinese central government will provide sufficient and timely extraordinary support to CITIC Group in the event of financial distress.”