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00902 HUANENG POWER
RTNominal up4.610 +0.160 (+3.596%)
Research Report

10/02/2020 12:32

Moody's assigns first-time A2 rating to Huaneng Power

[ET Net News Agency, 10 February 2020] Moody's Investors Service has assigned a
first-time A2 issuer rating to Huaneng Power International, Inc. (HPI)(00902).
At the same time, Moody's has assigned a A2 senior unsecured rating to the proposed
guaranteed bond to be issued by Sinosing Services Pte. Ltd., an indirect wholly owned
subsidiary of HPI. The bond will be unconditionally and irrevocably guaranteed by HPI.
The ratings outlook on both the issuer rating and the senior unsecured rating is stable.
The proceeds from the proposed issuance will be used for refinancing existing
indebtedness.
HPI's A2 issuer rating reflects its stand-alone credit strength, and a five-notch
uplift, reflecting Moody's expectation of extraordinary support from the Government of
China (A1 stable) through HPI's parent, China Huaneng Group Co. Ltd. (CHGC, A2 stable), in
times of need.
"HPI's standalone credit strength reflects its position as the core listed flagship
platform for the conventional power generation assets of CHGC, with national coverage and
strong geographical focus in provinces with robust power demand," said Boris Kan, a
Moody's Vice President and Senior Credit Officer.
"Such position provides HPI with significant operating flexibility, providing key credit
support," added Kan.
"At the same time, HPI's stand-alone credit strength is constrained by (1) its high
financial leverage; and (2) an evolving regulatory regime, with a new tariff mechanism to
be introduced next year that will increase price volatility," adds Kan. Other credit
considerations include its exposure to the Singapore power generation market, which is
facing oversupply.
The five-notch uplift reflects the agency's belief that CHGC has strong commitment to
support HPI in times of need, as demonstrated by its ongoing support by way of (1) track
record in provision of credit facilities to HPI by CHGC's subsidiaries, with a maximum
balance of RMB16 billion under the latest framework agreement; and (2) injections of about
36GW of power generation assets on an equity-attributable basis into HPI since its
listing, representing about 39% of HPI's equity-based installed capacity at the end of
2018. HPI's A2 rating is on par with CHGC, reflecting that HPI is a core part of its
parent and accounting for around 60% of its parent's installed capacity as of the end of
2018. (KL)

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