Beijing Infrastructure Investment Co. Ltd.

The stable outlook on BII reflects our view that the creditworthiness of the Beijing government is stable. We expect the likelihood for BII to receive extraordinary support from the government to stay almost certain because of the company's critical role in executing Beijing's long-term urban transport development plan and its status as a public service provider. The stable outlook on Beijing Infrastructure Investment (Hong Kong) Ltd. (BIIHK) reflects the stable outlook on parent BII. The rating on BIIHK will move in tandem with that on BII--with a one-notch difference. This reflects our view of BIIHK's position as a highly strategic subsidiary of the group, and our top-down rating approach for BIIHK. We may lower the rating on BII if we

...We continue to view Beijing Infrastructure Investment Co. Ltd. (BII) as maintaining an almost certain likelihood of receiving extraordinary government support. BII plays a critical role in executing the capital city's long-term urban transport development plan and metro operation. Given its status as the provider of an essential public service whose pricing has been highly regulated to be very low and far from sufficient to cover costs, the company has been receiving substantial construction funds and operation subsidies from the Beijing municipal government. Such payments are based on the 30-year Authorize-Build-Operate (ABO) agreement inked with the municipal government, which covers debt principal and interest payments of metro lines in phase two of Beijing's rail transit planning, i.e., 30 lines with total mileage of 1,177 kilometers (km). We believe the government has effective governance, monitoring, and control over BII. We do not expect the Beijing government's full ownership of...

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