Research Update: China Modern Dairy Holdings Ltd. Assigned 'BBB' Rating With Stable Outlook; Proposed Notes Rated 'BBB'

In our view, China Modern Dairy Holdings Ltd. (CMD) is a highly strategic subsidiary of China Mengniu Dairy Co. Ltd. (Mengniu), given its status as the largest milk supplier to Mengniu, its importance to the parent's growth strategy, and the parent's goal of maintaining control and track record of financial support. Client and product concentration, exposure to commodity price volatility, and high short-term debt limit CMD's stand-alone credit profile. These are partially offset by the company's long-term offtake agreements and good operating efficiency. On July 5, 2021, S&P Global Ratings assigned its 'BBB' long-term issuer credit rating to CMD. At the same time, we assigned our 'BBB' long-term issue rating to the company's proposed senior unsecured notes. The stable outlook

...- In our view, China Modern Dairy Holdings Ltd. (CMD) is a highly strategic subsidiary of China Mengniu Dairy Co. Ltd. (Mengniu), given its status as the largest milk supplier to Mengniu, its importance to the parent's growth strategy, and the parent's goal of maintaining control and track record of financial support. - Client and product concentration, exposure to commodity price volatility, and high short-term debt limit CMD's stand-alone credit profile. These are partially offset by the company's long-term offtake agreements and good operating efficiency. - On July 5, 2021, S&P Global Ratings assigned its '###' long-term issuer credit rating to CMD. At the same time, we assigned our '###' long-term issue rating to the company's proposed senior unsecured notes. - The stable outlook on CMD reflects the outlook on Mengniu and our expectation that CMD will remain a highly strategic subsidiary of Mengniu over the next two years. The rating and outlook on CMD will hence move in tandem with...

Research Update