ICBCIL Finance#s Proposed Drawdown Under Its US$10 Billion MTN Program Rated #A#; MTN Program Ratings Affirmed

Stocks and Financial Services Press Releases Tuesday May 8, 2018 20:42
HONG KONG--8 May--S&P Global Ratings

HONG KONG (S&P Global Ratings) May 8, 2018--S&P Global Ratings today assigned its 'A' long-term issue rating to a proposed drawdown under the US$10 billion medium-term note (MTN) program by ICBCIL Finance Co. Ltd. (A/Stable/A-1). The issue rating is subject to our review of the final issuance documentation. At the same time, we affirmed our 'A' long-term and 'A-1' short-term ratings on the MTN program.

The issue rating reflects our view that ICBCIL Finance is a core part of its ultimate parent, Industrial and Commercial Bank Of China Ltd. (ICBC: A/Stable/A-1). ICBCIL Finance is a wholly owned finance company of ICBC International Leasing (ICBCIL) and serves the centralized treasury function for ICBC's overseas leasing business.

ICBCIL Finance is under the management control of ICBC Financial Leasing Co. Ltd. (ICBCFL: A/Stable/A-1). Given management control and the nature of the company's business, we view the issuer as an extension of the group's onshore leasing business and a core entity of ICBC's leasing business subgroup led by the ICBCFL.

In our view, the leasing subgroup is a core part of ICBC's business because it helps the bank to provide a full suite of financial services and expand its overseas business. We believe ICBCIL Finance, as an integral part of the leasing subgroup, will receive timely and sufficient financial support from the group in times of need.

ICBCIL Finance will use the net proceeds from the issue primarily offshore to fund the acquisition of assets in the ordinary course of business and for general corporate purposes.

While we continue to apply our group rating methodology to determine our ratings, we no longer apply our "Reflecting Subordination Risk In Corporate Issue Ratings" criteria. We believe this approach better reflects the economic reality of ICBCIL Finance as a part of a bank credit, rather than a corporate operation under a bank, and the inherent credit risks in the company's senior unsecured debt.

This change in approach has no impact on the issue ratings on ICBCIL Finance's rated debt because no notching on issue rating is required under both approaches.

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