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Moody's assigns Baa1(hyb) rating to China Construction Bank (Asia)'s PONV subordinated notes issued under its MTN program.

Summary: Foreign currency senior unsecured: A2

Moody's Investors Service, ("Moody's") has

assigned a Baa1(hyb) rating to China Construction Bank (Asia)'s (CCB

Asia) proposed subordinated notes issued under its $5 billion medium term

note (MTN) program. The subordinated notes are subject to a partial or

full principal write-down at the point of non-viability (PONV) on a

contractual basis.

The rating on the PONV subordinated notes is one level below CCB Asia's

a3 baseline credit assessment (BCA). The outlook on the proposed rating

on the PONV subordinated notes is negative, in line with the negative

outlook on its bank financial strength rating.

The proposed PONV subordinated debt qualifies as regulatory Tier 2 capital.

The rating on the notes is subject to the receipt of final documentation,

the terms and conditions of which are not expected to change in any

material way from the draft documents that Moody's has reviewed.


The Baa1(hyb) rating is positioned one notch below the bank's BCA. CCB

Asia is wholly-owned by its parent, China Construction Bank, which is

majority-owned by the Chinese government. For the Tier 2 notes, we do not

believe that government support would be indirectly extended to these

securities, which are specifically designed to absorb losses. The rating

reflects the risk of a full or partial write-down to bondholders if a

decision is made to make a public sector capital injection or equivalent

support; or if the regulator makes a discretionary evaluation,

determining that a write-down is necessary. We have positioned the rating

one notch below the bank's BCA because it is unlikely that losses would

be imposed on these securities before the point of non-viability.

Under the notes' terms, the Hong Kong Monetary Authority (HKMA) has

discretion to determine the point at which the bank is non-viable. The

principal on these capital securities would be written down, partially or

in full, in the event that the HKMA notifies the bank that without such

write-off, the bank would become non-viable, or the government or a

regulatory body decides to make a public sector injection of capital

without which the bank would become non-viable.

Ratings assigned to future draw downs from the bank's MTN program will be

contingent upon review of their specific terms and conditions.

CCB Asia's other ratings remain unaffected. The ratings are as follows:

- Local and foreign currency long-term/short-term deposits: A2/P-1

- BCA/Adjusted BCA: a3/a2

- Bank Financial Strength Rating: C

- Foreign currency senior unsecured: A2

- Foreign currency senior unsecured MTN: (P)A2

- Local currency long-term deposit note/CD Program: (P)A2

- Local currency short-term deposit note/CD Program: (P)P-1

- Other foreign currency short- term: (P)P-1

The bank has a stable outlook on its deposit ratings and a negative

outlook on its standalone bank financial strength rating.

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Publication:EMBIN (Emerging Markets Business Information News)
Geographic Code:90ASI
Date:Aug 7, 2014
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