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Moody's completes a periodic review of ratings of Baoshan Iron & Steel Co

Steel News - Published on Mon, 15 Apr 2019

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Moody's Investors Service has completed a periodic review of the ratings of Baoshan Iron & Steel Co Ltd and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. The review did not involve a rating committee. Since 1 January 2019, Moody's practice has been to issue a press release following each periodic review to announce its completion.

Key rating considerations are summarized below

Baoshan Iron & Steel Co Ltd.'s (BISC) A3 issuer rating incorporates
(1) the company's baa2-level standalone credit strength
(2) Moody's assessment of a high likelihood of support from its parent, China Baowu Steel Group Corporation Limited (Baowu, A3 stable) in times of need, factors which result in a two-notch uplift

The support assumption takes into consideration
(1) BISC's status as a flagship subsidiary of Baowu
(2) The company's strategic importance within Baowu
(3) The track record of parental support.

BISC's standalone credit profile is supported by the company's
(1) Large-scale integrated steel production and strong market shares
(2) Premium product offerings
(3) Improved debt leverage level because of better profitability

On the other hand, BISC's standalone credit profile is constrained by
(1) Its high geographic concentration in China
(2) The cyclical and volatile nature of the steel industry
(3) Potential macro challenges arising from the US-China trade tension and slower economic growth in China

Source :

Posted By : Ratan Singh on Mon, 15 Apr 2019
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