Qingdao City Construction Investment (Group) Limited (Surveillance Report)

Lianhe Ratings Global Limited (“Lianhe Global”) has upgraded the global scale Long-term Issuer and Issuance Credit Rating of Qingdao City Construction Investment (Group) Limited (“QCCI”) to ‘A’ from ‘A-’. The Outlook is Stable.

The Issuer Rating upgrade reflects our internal assessment on Shandong’s Qingdao municipal government (“Qingdao government”), and the increased strategic importance of QCCI to Qingdao and strengthened relationship between QCCI and the Qingdao government, as demonstrated by the continued transfer of strategic state assets to QCCI in 2021. We believe there continues to present a high possibility that the Qingdao government would provide strong support to QCCI if needed, in light of the Qingdao government’s full ownership of QCCI, the high strategic importance of QCCI to Qingdao and the increasingly strong linkage between the Qingdao government and QCCI including management supervision, strategic alignment, and ongoing operational and financial support. In addition, the Qingdao government may face a significant negative impact on its reputation and business and financing activities should QCCI encounter any operational or financial difficulties.

Lianhe Global has also upgraded the global scale Long-term Issuance Credit Rating of the senior unsecured USD bonds issued by QCCI’s wholly-owned subsidiary Hong Kong International (Qingdao) Company Limited (“HKIQD”) to ‘A’ from ‘A-’ at the same time. QCCI shows strong willingness to support HKIQD in meeting its debt obligations by offering a keepwell deed, a deed of equity interest purchase undertaking and an irrevocable standby facility agreement. A full list of issuance ratings is included in this report.

The Issuer Rating Outlook reflects our expectation that QCCI’s strategic importance would remain intact while the Qingdao government will continue to ensure QCCI’s stable operation.