Fitch Rates China Orient International's USD1.4 Billion MTN Programme, USD Notes 'A-(EXP)'/RWN

Fitch Ratings has assigned China Orient Asset Management (International) Holding Limited's (China Orient International, A-/Rating Watch Negative (RWN)) USD1.4 billion medium-term note (MTN) programme and the proposed senior unsecured US dollar notes to be issued under the programme an expected rating of 'A-(EXP)'/RWN.

Notes issued under the MTN programme may be in any currency or of any tenor.

The senior notes under the MTN programme will be issued under Joy Treasure Assets Holdings Inc., a wholly owned subsidiary of China Orient International, and will be unconditionally and irrevocably guaranteed by China Orient International, a wholly owned subsidiary of China Orient Asset Management Co., Ltd. (China Orient, A-/RWN).

The proceeds of the proposed US dollar notes will be used as working capital and for general corporate purposes. The final ratings on the proposed MTN programme and US dollar notes are contingent upon the receipt of final documents conforming to information already received.

Key Rating Drivers

The senior notes under the MTN programme are rated at the same level as China Orient International's Issuer Default Rating (IDR) as they represent its unsubordinated, unconditional, unsecured obligations and rank at all times pari passu with all of its other present and future obligations.

Fitch's rating on the MTN programme is for the programme in general and individual issues under it may not be assigned the same rating as the programme and Fitch reserves the right not to rate certain instruments issued under the programme.

Fitch equalises the ratings on China Orient International with those of its parent because China Orient International's business is an extension of China Orient's business in the offshore market and it serves as the critical point for the group to access offshore capital markets and to diversify funding channels. The rating equalisation reflects China Orient International's role as China Orient's wholly owned and sole key offshore funding platform incorporated in Hong Kong.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

Negative rating action on China Orient's IDR would result in similar rating actions on China Orient International's IDR, its MTN programme and the rated notes under its MTN programme.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

Positive rating action on China Orient's IDR would result in similar rating actions on China Orient International's IDR, its MTN programme and the rated notes under its MTN programme.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

Public Ratings with Credit Linkage to other ratings

The ratings on the notes issued by China Oriental International are linked to its parent company's ratings, which are in turn directly linked to China's sovereign rating (A+/Stable).

ESG Considerations

China Orient International has an ESG Relevance Score of '4' for Management Strategy due to China Orient's continued strategic shift to refocus on its core distressed-asset management business and non-core business divestment. Its ability to execute its strategy under capital constraints remains a relevant consideration for the company's focus on its policy role, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

China Orient International has an ESG Relevance Scores of '4' for Governance Structure given China Orient's high ownership concentration with the Ministry of Finance owning over 70% of shares. The governance structure is also considered weaker as it is not publicly listed. These have a negative impact on the credit profile, and are relevant to the ratings in conjunction with other factors.

China Orient International has an ESG Relevance Score of '4' for Financial Transparency, given China Orient's limited transparency on asset quality. This has a negative impact on the credit profile and is highly relevant to the ratings in conjunction with other factors.

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit www.fitchratings.com/topics/esg/products#esg-relevance-scores