State Grid Corp. of China

Evolving regulatory framework moving towards better transparency and predictability. Largely stable tariffs in the transition to new regime. Dominant position in China's power transmission and distribution sector. Good operating performance to ensure grid safety and stability. Above-average appetite for overseas acquisitions. Recovering power consumption in China. Stable and robust operating cash flows. Significant capital expenditure and overseas investments to put some strain on financial leverage. The negative outlook on State Grid Corp. of China (SGCC) reflects our negative outlook on the sovereign credit rating on China. Both ratings will move in tandem because of our assessment of an extremely high likelihood of support from the Chinese central government to the company. We expect SGCC to preserve margins through stable transmission

...Outlook: Negative The negative outlook on State Grid Corp. of China (SGCC) reflects our negative outlook on the sovereign credit rating on China. Both ratings will move in tandem because of our assessment of an extremely high likelihood of support from the Chinese central government to the company. We expect SGCC to preserve margins through stable transmission and distribution (T&D) tariffs amid moderate growth in power demand in China. Meanwhile, we believe power sector reforms in China, while evolving, are likely to have long-term positive credit implications for SGCC. The stand-alone credit profile is therefore likely to remain stable for the next 24 months, at least....

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