China Construction Bank Corp., Macau Branch -- Moody's assigns A1 rating to green notes of China Construction Bank, Macau Branch

Rating Action: Moody's assigns A1 rating to green notes of China Construction Bank, Macau BranchGlobal Credit Research - 14 Dec 2021Hong Kong, December 14, 2021 -- Moody's Investors Service, ("Moody's") has assigned A1 rating to the proposed USD-denominated 3-year floating-rate senior unsecured green notes to be issued by China Construction Bank Corporation (CCB), Macau Branch. Moody's has also assigned (P)A1 local and foreign currency senior unsecured Medium Term Note (MTN) program rating to CCB, Macau Branch.The rating outlook is stable.A list of all affected ratings and assessments is provided at the end of this press release.The green notes will be issued under CCB's USD15 billion MTN Programme. The net proceeds from the issue will be allocated to finance and/or refinance, in whole or in part, loans to customers involved in as well as the bank's own operational activities in eligible green projects.The assigned ratings are subject to receipt of final documentations, the terms and conditions of which are not expected to change in any material way from the draft documents that Moody's has reviewed.RATINGS RATIONALEThe assigned ratings and stable outlook are in line with CCB's long-term deposit rating and outlook, reflecting the structure of the issuance and the fact that CCB, Macau Branch is a branch of CCB and forms part of the same legal entity as CCB. The notes will constitute direct, unconditional, unsubordinated, and unsecured obligations of CCB and will at all time rank pari passu among themselves. The notes will be redeemable at par on maturity.CCB's Baseline Credit Assessment (BCA) is baa1 and Adjusted BCA, which incorporates no affiliate support, is the same as its BCA. China does not have an operational resolution regime. Therefore, Moody's applies a basic Loss Given Failure approach in rating CCB's debt securities and assumes a very high level of support from the Chinese government in times of need. As a result, ratings of senior unsecured debts are uplifted by three notches to A1.Moody's does not intend to assign ratings to notes for which the payment of the principal or interest is variable and contractually dependent on the occurrence of a non-credit-linked event or the performance of an index (non-credit-linked notes).FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSThe assigned ratings are in line with CCB's long-term deposit rating. Any changes in CCB's deposit ratings will lead to a similar rating action for CCB, Macau Branch.CCB's long-term deposit rating is at the same level as the senior unsecured debt rating of the Government of China, after factoring in a very high level of government support. Hence, there could be upward pressure on the rating should the Chinese government's capacity to support the bank, as reflected in the senior unsecured debt rating of the Government of China, strengthen.Moody's could upgrade CCB's BCA if China's credit conditions improve with strong economic recovery supported by a less intensive credit growth, and the bank's capitalization strengthens, with an improvement in its Core Tier 1 capital ratio consistently above 14.0% while its profitability maintained at around the current level.There could be downward pressure on CCB's long-term deposit rating should the Chinese government's willingness or capacity to support the bank weaken or if the bank's BCA is downgraded.Moody's could downgrade CCB's BCA if the operating environment weakens significantly, for example, if China's economic growth moderates further or corporate financial leverage continues to increase. Moody's could also downgrade CCB's BCA if the bank's capitalization weakens, with a deterioration in its Core Tier 1 capital ratio to consistently below 12.0%; and profitability, as measured by net income/tangible banking assets, reduces, which could be a result of much weaker asset quality, and is consistently below 0.8%.The principal methodology used in these ratings was Banks Methodology published in July 2021 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1269625. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.China Construction Bank Corporation is a state-owned commercial bank and a global systemically important bank, as identified by the Financial Stability Board. Headquartered in Beijing, China, the bank reported total assets of RMB30.1 trillion and total equity of RMB2.5 trillion as of 30 September 2021.LIST OF AFFECTED RATINGS/ASSESSMENTS:Long-term foreign currency senior unsecured debt rating assigned at A1, outlook stableLong-term local and foreign currency senior unsecured medium-term note (MTN) program rating assigned at (P)A1Long-term/short-term local and foreign currency Counterparty Risk Ratings assigned at A1/P-1Long-term/short-term Counterparty Risk Assessment assigned at A1(cr)/P-1 (cr)Outlook is stableThe local market analyst for these ratings is Nicholas Zhu, +86 (10) 6319-6536.REGULATORY DISCLOSURESFor further specification of Moody's key rating assumptions and sensitivity analysis, see the sections Methodology Assumptions and Sensitivity to Assumptions in the disclosure form. 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