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Fitch Places Baosteel Resources' 'BBB+' Ratings on Rating Watch Evolving

Published 28/06/2016, 09:57 pm
© Reuters. Fitch Places Baosteel Resources' 'BBB+' Ratings on Rating Watch Evolving

(The following statement was released by the rating agency)HONG KONG/SHANGHAI, June 28 (Fitch) Fitch Ratings has placed Baosteel Resources International Company Limited's (BRI) Long-Term Foreign-Currency Issuer Default Rating (IDR) and senior unsecured rating of 'BBB+' on Rating Watch Evolving (RWE), following the rating action taken on its parent, Baosteel Group Corporation (Baosteel Group, 'A-'/RWE). Please see Fitch Places Baosteel's 'A-' Rating on Rating Watch Evolving Following Announced Restructure /a , published 28 June 2016. Fitch has also placed on RWE the 'A-' rating on the USD500m 3.875% senior unsecured notes, due 2020, issued by BRI's wholly owned subsidiary, Baosteel Financing 2015 Pty Ltd. The notes are unconditionally and irrevocably guaranteed by BRI and are rated at the same level as Baosteel Group. This is because Baosteel Group has granted an investment and keepwell deed and a liquidity-support covenant deed to ensure the issuer and BRI have sufficient assets and liquidity to meet their respective obligations for the notes.KEY RATING DRIVERSThe RWE follows Fitch's rating action of placing Baosteel Group on RWE, reflecting uncertainty over the outcome of Fitch's reassessment of Baosteel Group's announced restructuring with Wuhan Iron and Steel Group (WISCO) on 26 June 2016. BRI is rated one level below its 100%-owner, Baosteel Group, due to its strong linkages to the parent arising from its unique position as the group's only offshore resource development platform, overseas resources trading platform and offshore financing vehicle. Baosteel Group is rated one notch above its standalone rating of 'BBB+' to reflect potential state support due to its strategic importance to China as the largest and most profitable steel company that drives development of the country's steel industry. RATING SENSITIVITIESThe RWE will be resolved upon completion of our review of the restructured group. We will downgrade the ratings if we conclude Baosteel Group's standalone rating will weaken and the linkage between Baosteel Group and China's State-owned Assets Supervision and Administration Commission (SASAC) is not enhanced,. Fitch may upgrade BRI's rating if we deem Baosteel Group's standalone rating as remaining unchanged and that the linkage between Baosteel Group and SASAC has strengthened.Contact: Primary AnalystLaura ZhaiDirector+852 2263 9974Fitch (Hong Kong) Limited19/F Man Yee Building68 Des Voeux Road Central, Hong KongSecondary AnalystCharles LiAnalyst+86 21 5097 3076Committee ChairpersonKalai PillaySenior Director+65 6796 7221Media Relations: Wai-Lun Wan, Hong Kong, Tel: +852 2263 9935, Email: wailun.wan@fitchratings.com.Additional information is available on www.fitchratings.comApplicable Criteria Corporate Rating Methodology - Including Short-Term Ratings and Parent and Subsidiary Linkage (pub. 17 Aug 2015)https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=869362Additional Disclosures Solicitation Status https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=1008101Endorsement Policy https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&det ail=31ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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