Standard & Poor's Ratings Services on Monday assigned its 'BBB+' senior unsecured long-term foreign currency ratings to China Development Bank's (CDB) proposed global bonds, which will be denominated in US dollar and euro.

"Standard & Poor's issuer credit ratings on CDB are equated to those of the People's Republic of China (BBB+/Positive/A-2), reflecting the strong support from the government, its sole owner," said Standard & Poor's credit analyst Ping Chew, director of Asia Sovereign & International Public Finance Ratings Group, on Monday.

The ratings also reflect CDB's key role as PRC's pre-eminent development bank, supporting major public investment priorities and the government's efforts to spur economic growth in the central and western regions of the country.

CDB enjoys unique access to short-term liquidity from the central bank to support debt service payments and to bridge timing differences between the receipt of debenture proceeds and project loan payments. "Although this is not equivalent to a sovereign guarantee on CDB's debt, it is stronger and more explicit support than provided to other Chinese financial institutions," noted Chew.

CDB, the largest of China's three policy banks, provides long-term funding for medium-and large-sized projects in key sectors of the economy. In addition to lending to Chinese borrowers, including state enterprises and the resident partners of Sino-foreign joint ventures, CDB also offers financial advisory services and competes with commercial banks on banking services, the rating service said.

The development bank is wholly owned by the government. The policy banks are the only financial institutions other than the People's Bank of China, the central bank, to report to the State Council, China's highest executive organ. In addition, the State Council addresses major strategic issues confronting the bank, and directly approves CDB's annual working plan.

"Standard & Poor's expects that CDB's relationship with the government and its operating environment are unlikely to change materially in the coming years," said Chew.

"The bank's asset quality also looks to be better than most in the Chinese banking system, due to the bank's own tight credit control, and its implicit preferred creditor status with local government. Furthermore, the bank is one of the few Chinese banks that have its financial statements audited by an international auditor and presented in accordance with international accounting standards," added Chew.

Standard & Poor's is a leader in providing widely recognized financial data, analytical research and investment and credit opinions to the global capital markets.

Source: Xinhua