State Grid Corp. of China

Improving regulatory regime amid steady roll-out of sector reforms. Stable profit margins despite the government's efforts to lower end-tariffs. Dominant market position in China. Sustained capital spending in domestic networks and overseas acquisitions. Recovery in power consumption and economy to support earnings and cash flows. The stable outlook on State Grid Corp. of China (SGCC) reflects our stable outlook on the sovereign credit rating on China (A+/Stable/A-1). The rating on SGCC will move in tandem with the sovereign rating because of our assessment of an extremely high likelihood of support from the Chinese central government to the company. We expect SGCC to preserve its margins through stable transmission and distribution (T&D) tariffs amid moderate growth in power demand in China.

...Business Risk: Strong Financial Risk: Modest + Improving regulatory regime amid steady roll-out of sector reforms. + Stable profit margins despite the government's efforts to lower end-tariffs. + Dominant market position in China. + Sustained capital spending in domestic networks and overseas acquisitions. + Recovery in power consumption and economy to support earnings and cash flows....

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