• General Corporate

• General Corporate: Addendum

• Chinese Property Developer

• China Local Investment and Development Companies (“LIDC”)

• Banks

• Non-Bank Financial Institutions

• Investment Holdings and Conglomerates

• Money Market Funds

• Hybrid Instruments: Equity Credit and Notching Criteria

• Structured Finance

General Corporate Rating Criteria

Our criteria report comprises three segments: (1) operating environment of the country in which a corporate entity is domiciled, (2) industry analysis in which the corporate entity conducts its business, and (3) corporate entity analysis which comprises (a) qualitative business and (b) quantitative financial analysis. We take a holistic view on a corporate entity balancing all-around political, economic, industrial, operational, and financial factors.

General Corporate Rating Criteria: Addendum

Lianhe Ratings Global Limited’s (“Lianhe Global”) current general corporate criteria were published on 31 December 2021. This addendum primarily elaborates on factors we consider in relation to financial forecasts when assigning ratings to general corporates in the “Financial Analysis” section under the current general corporate criteria. Specifically, under certain circumstances, the performance of financial projections may not be relevant or meaningful from an analytical standpoint.

Chinese Property Developer Rating Criteria

Our criteria report comprises three segments: (1) operating environment of China, (2) industry analysis, and (3) corporate analysis which comprises (a) qualitative business and (b) quantitative financial analysis. We take a holistic view on a Chinese property developer balancing all-around political, economic, industrial, operational, and financial factors.

China Local Investment and Development Companies (“LIDC”) Rating Criteria

Lianhe Global applies the LIDC criteria to Chinese entities, that are 1) directly- or indirectly-owned, usually controlling, either through economic or voting control, by government(s) or government department(s) and 2) fulfil the definition of LIDCs. The criteria intend to cover most China LIDCs, but there are circumstances in which an LIDC may fall outside this scope. We believe these cases would be few and far between and we intend to use the same underlying principles to conduct our analysis on them.

The criteria do not represent a comprehensive coverage but only addresses key rating factors to form our credit opinions and will be reviewed periodically. Credit opinions tend to be forward-looking and include our views of issuers’ future performance and development.

Banking Rating Criteria

Our criteria report explains Lianhe Global’s general approach to assessing a bank’s standalone credit profile and the likelihood of external support that the entity will receive in case of need, i.e. to sustain a bank’s viability. We incorporate the availability of external support into the assessment of the bank’s standalone credit strength to assign a credit rating to the bank.

Non-Bank Financial Institutions Rating Criteria

The criteria report explains Lianhe Global’s general approach to assessing a non-bank financial institution’s standalone credit profile and the likelihood of external support that the entity will receive in case of need, i.e. to sustain the institution’s viability. We incorporate the availability of external support into the assessment of a non-bank financial institution’s standalone credit strength to assign a credit rating to the entity.

The most common form of support for a non-bank financial institution is the institutional support from the entity’s parent. Government support is not common for most non-bank financial institutions given the lack of systemic importance, although this may be available for an institution with a policy role.

Investment Holdings and Conglomerates Criteria

Lianhe Ratings Global Limited (“Lianhe Global”) applies the investment holdings and conglomerates criteria to investment holding companies which primarily act as financial investors holding equity stakes in a number of private or publicly traded companies. The criteria also describe Lianhe Global’s general approach for assessing credit profiles of conglomerates which usually hold controlling stakes (typically wholly or majority-owned) in several main operatin subsidiaries across various businesses.

Money Market Funds Rating Criteria

Lianhe Ratings Global Limited (“Lianhe Global”) applies the money market fund (“MMF”) criteria to MMFs and similar investment vehicles that mainly invest in short-term fixed income instruments and their primary objectives are to preserve principal and provide liquidity to investors. Short-term fixed income instruments are typically high-quality debt securities with maturities of less than a year, providing income in the form of interest payments or purchased at a discount to par.

Hybrid Instruments: Equity Credit and Notching Criteria

Lianhe Ratings Global Limited (“Lianhe Global”) applies the hybrid instruments criteria to corporate entities that are not in the industry of banking, non-bank finance, regulated monopolies (e.g. utilities), not-for-profit, and public and government services. The criteria does not represent a comprehensive coverage but only addresses key rating factors to form our credit opinions and will be reviewed periodically.

Structured Finance Criteria

Lianhe Ratings Global Limited (“Lianhe Global”) applies this structured finance criteria to transactions backed by assets including, but not limited to, consumer loan receivables, residential & commercial mortgage loans, corporate loans, CLO/CDO as well as equipment leases. The criteria do not represent a comprehensive coverage but only addresses key rating factors to form our credit opinions and will be reviewed periodically. Credit opinions tend to be forward-looking and include our views of structured finance transactions as well as related counterparties’ future performance and development.