Liangshan Development (Holdings) Group Co., Ltd. (Surveillance Report)

The Issuer Rating reflects a high possibility that Sichuan’s Liangshan Yi Autonomous Prefecture (“Liangshan”) would provide strong support to LDHG if needed, in light of the Liangshan government’s majority ownership in LDHG, the strategic importance of LDHG to Liangshan and the strong linkage between the Liangshan government and LDHG, including management supervision and strategic alignment. In addition, the Liangshan government may face adverse impact on its reputation, and business and financing activities should LDHG encounter any operational or financial difficulties.

The Stable Outlook reflects our expectation that LDHG’s strategic importance would remain intact while the Liangshan government will continue to ensure LDHG’s stable operation. The Liangshan government has provided ongoing strong support to LDHG, including asset and capital injections, financial subsidies, preferential tax policies, etc.