OREANDA-NEWS. Fitch Ratings has affirmed the rating on China Chengtong Development Group Limited's (Chengtong) CNY600m 4% credit enhanced bonds denominated in offshore yuan and due 2017 at 'A'.

KEY RATING DRIVERS

Irrevocable Standby Letter of Credit: The rating reflects the credit enhancement provided to investors by the Beijing Branch of Agricultural Bank of China Limited (ABC; A/Stable). The note is rated at the same level as ABC's Long-Term Issuer Default Rating (IDR) as ABC is bound by agreements made by its branches and thus the transaction is considered a senior unsecured obligation of ABC.

Investors will have the benefit of an irrevocable standby letter of credit denominated in Chinese yuan issued by ABC that will expire one month after the maturity of the bonds. The standby letter of credit amount includes any amount that the issuer has failed to pay into the prefunding account when required to do so before any payment dates, including at the maturity of the bonds. In the event of default by the issuer, ABC would be obligated to the investors for the outstanding principal and interest payable.

RATING SENSITIVITIES

Since the rating of the credit enhanced bonds is based solely on ABC's commitment to meet its obligations under the standby letter of credit to the investors, any change in Fitch's assessment of ABC's ratings will result in an equivalent change in the rating of this bond.