Shuifa Group Co., Ltd. (Initial Issuer Report)

The Issuer Credit Rating reflects a high possibility that the Shandong provincial government would provide strong support to Shuifa if needed, in light of its majority ownership of Shuifa, Shuifa’s strategic position as the sole provincial level, the major water supply and water-related project development platform in Shandong Province and the strong linkage between the Shandong provincial government and Shuifa including management supervision, strategic alignment, and ongoing operational and financial support. In addition, the Shandong provincial government may face significant negative impact on its reputation and business and financing activities should Shuifa encounter any operational or financial difficulties.

The Stable Outlook reflects our expectation that Shuifa’s strategic importance will remain intact while the Shandong provincial government will continue to ensure Shuifa’s stable operation.