Sinochem Hong Kong (Group) Co. Ltd.

The stable outlook on Sinochem Hong Kong reflects our expectation that the company will remain a core subsidiary of Sinochem Group and benefit indirectly from extraordinary government support to the group. We anticipate that Sinochem Group's credit metrics will be relatively stable in 2019-2020 because high capital spending will constrain the group's pace of deleveraging. We could lower the rating if:(1) Sinochem Group's financial performance deteriorates or the group pursues large-scale acquisitions or construction of new projects and primarily funds these with debt, such that its funds from operations (FFO) cash interest coverage falls below 2.5x over a prolonged period; or (2) in an unlikely case, we assess the likelihood of timely and sufficient extraordinary government support to Sinochem Group

...Company to remain a core subsidiary of Sinochem Group. We expect Sinochem Group to remain the key driver of Sinochem Hong Kong (Group) Co. Ltd.'s credit profile. This is because the subsidiary is integral to the group strategically, operationally, and financially. As the group's sole offshore platform for investments and offshore funding, Sinochem Hong Kong will likely receive necessary support from Sinochem Group to meet its debt obligations. Sinochem Hong Kong to benefit from support from Sinochem Group and indirectly from the Chinese government.The group is one of the two chemical companies owned by the central government in China. It continues to execute strategic functions for the government. We believe that extraordinary government support for the parent is likely to flow to Sinochem Hong Kong in case the company comes under financial distress because it is the key offshore platform for the group. Sinochem Group to maintain focus in energy, chemicals, agriculture, real estate, and...

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