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Moody's affirms Sinopec's Aa3 after reduction in oil price assumptions

Staff writer |
Moody's Investors Service has affirmed the Aa3 issuer ratings of China Petrochemical Corporation (Sinopec Group) and its key listed subsidiary, China Petroleum and Chemical Corporation (Sinopec Corp).

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Moody's has also affirmed the following ratings guaranteed by Sinopec Group and Sinopec Corp:

The Aa3 rating of the senior unsecured bonds issued by Sinopec Group Overseas Development (2012) Limited, Sinopec Group Overseas Development (2013) Limited and Sinopec Group Overseas Development (2014) Limited, and Sinopec Group Overseas Development (2015) Limited. These notes are guaranteed by Sinopec Group.

The Aa3 ratings of the senior unsecured bonds issued by Sinopec Capital (2013) Limited and guaranteed by Sinopec Corp.

The Prime-1 rating for the commercial paper program launched by Sinopec Century Bright Capital Investment Limited (A1 stable) and guaranteed by Sinopec Group.

The outlook for all the ratings remains stable.

The rating actions follows the sharp reduction in Moody's oil price assumptions in light of continuing oversupply in the global oil markets.

Moody's now assumes the Brent crude, the international benchmark, to average $43 per barrel and $48 per barrel in 2016 and 2017 respectively. This marks a $10 per barrel and $12 per barrel reduction from its previous assumptions for 2016 and 2017 respectively.

Sinopec Group's Aa3 issuer rating incorporates the company's BCA of a3 and Moody's assessment of the extraordinary support that the Chinese government (Aa3 stable) is likely to provide to the company in the event of need.

Such a high level of support results in a three-notch uplift of Sinopec Group's issuer rating to Aa3 under Moody's joint default analysis approach for government-related issuers.


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