Shaoxing City Investment Group Limited (Surveillance Report)

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

The Issuer Credit Rating upgrade reflects an upgrade in our internal credit assessment on Zhejiang’s Shaoxing Municipal Government and the expectation of a continuing of a high possibility that the Shaoxing Municipal Government would provide strong support to SCIG if needed. This mainly considers the Shaoxing Municipal Government’s 90% ownership of SCIG (with the other 10% owned by Zhejiang Finance Development Co., Ltd., a wholly owned entity of the Zhejiang Provincial Department of Finance, to subsidize the Provincial Social Security Fund), the high importance of SCIG to Shaoxing in the utilities (gas and water) infrastructures and services, as well as urban infrastructure and social-housing construction area, and the strong linkage between the Shaoxing Municipal Government and SCIG, including management supervision, ongoing operational and financial support. In addition, the Shaoxing Municipal Government may face significant negative impact on its reputation and financing activities if SCIG encounters any operational and financial difficulties.

Lianhe Global has also upgraded the global scale Long-term Issuance Credit Rating of the senior unsecured USD bonds issued by SCIG to ‘A’ from ‘A-‘ at the same time. A full list of Issuance Rating is included in this report.

The Stable Outlook reflects our expectation that SCIG’s strategic importance would remain intact while the Shaoxing Municipal Government will continue to ensure SCIG’s stable operation.