Huatai Securities Co., Ltd. -- Moody's assigns Baa1 to Huatai Securities' proposed USD bonds

Rating Action: Moody's assigns Baa1 to Huatai Securities' proposed USD bondsGlobal Credit Research - 29 Mar 2021Hong Kong, March 29, 2021 -- Moody's Investors Service has assigned a Baa1 long-term backed senior unsecured rating to the USD-denominated bonds to be issued by Pioneer Reward Limited and guaranteed by Huatai Securities Co., Ltd. (Baa1 stable).The assigned rating is based on draft documents reviewed by Moody's, which Moody's does not expect to be materially different from those in the final documentation.Pioneer Reward Limited, incorporated in the British Virgin Islands, is an indirect wholly-owned subsidiary of Huatai Securities.The entity-level outlook on Pioneer Reward Limited is stable, in line with the outlook for Huatai Securities.RATINGS RATIONALEThe Baa1 long-term backed senior unsecured rating for the proposed bonds is in line with Huatai Securities' Baa1 issuer rating, because the bonds are unconditionally and irrevocably guaranteed by Huatai Securities.Obligations under the guarantee will at all times rank pari passu with Huatai Securities' existing and future unsubordinated and unsecured obligations. Moody's has therefore rated the proposed bonds at Baa1, which is at the same level as Huatai Securities' issuer rating.FACTORS THAT COULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGSWHAT COULD CHANGE THE RATING -- UPThe proposed bonds are unconditionally and irrevocably guaranteed by Huatai Securities. Consequently, factors that can cause Huatai Securities' rating to be upgraded will also lead to an upgrade of the bond rating.Nonetheless, the ratings of Huatai Securities are unlikely to be upgraded because Moody's assesses that a further improvement in Huatai Securities' standalone credit profile would reduce the necessity for extraordinary government support, and therefore narrow government support uplift.WHAT COULD CHANGE THE RATING -- DOWNFactors that cause Huatai Securities' issuer rating to be downgraded will also lead to a downgrade of the bond rating. Specifically, Huatai Securities' issuer rating could be downgraded if Moody's assesses that the government's willingness and ability to support the company have weakened.Huatai Securities' issuer rating could also be downgraded if the company (1) faces a significant deterioration in profitability, (2) records a significant weakening in its financial positions, in particular because of a substantial increase in leverage or a deterioration in liquidity and funding, or (3) faces regulatory sanctions or risk management missteps that impair its franchises and management stability.The principal methodology used in these ratings was Securities Industry Market Makers Methodology published in November 2019 and available at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1187332. Alternatively, please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.Huatai Securities Co., Ltd. is headquartered in Nanjing with consolidated assets of RMB717 billion as of year-end 2020.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. Moody's Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.For ratings issued on a program, series, category/class of debt or security this announcement provides certain regulatory disclosures in relation to each rating of a subsequently issued bond or note of the same series, category/class of debt, security or pursuant to a program for which the ratings are derived exclusively from existing ratings in accordance with Moody's rating practices. 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