Geely Automobile Holdings Ltd.#s Proposed U.S. Dollar Senior Unsecured Notes Assigned #BBB-# Rating

Stocks and Financial Services Press Releases Friday January 12, 2018 17:30
HONG KONG--12 Jan--S&P Global Ratings

HONG KONG (S&P Global Ratings) Jan. 12, 2018--S&P Global Ratings today assigned its 'BBB-' long-term issue rating to a proposed issue of U.S. dollar-denominated senior unsecured notes by Geely Automobile Holdings Ltd. (Geely Auto, BBB-/Stable/--). The rating is subject to our review of the final issuance documentation.

The issue rating is the same as the long-term corporate credit rating on Geely Auto, as we believe holders of the notes are not structurally subordinated to other creditors of the company. This is because the Chinese automaker has limited borrowings (especially at the operating subsidiaries level) due to large cash balances. We expect Geely Auto to generate positive free operating cash flow over the next two years.

The company plans to use the bond proceeds to refinance existing debt and for general corporate purposes.

Our 'BBB-' long-term corporate credit rating on Geely Auto reflects our expectation that the company and its parent, Zhejiang Geely Holding Group Co. Ltd., will continue to improve their competitive positions and materially grow their sales volume in the Chinese and global auto market over the next 12-24 months. In our view, the companies' good product design and improving quality will support growth. We also anticipate that both entities will at least maintain their profitability, as a result of ongoing cost controls. However, their operations will continue to be subjected to the cyclical and competitive nature of the Chinese and global auto markets.


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