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Moody's Assigns A3 Rating to SPIC Preferred Company No.5 Ltd. Preference Shares

Strategic Insights

— 1 min read

Moody's Investors Service has assigned an A3 rating to the proposed preference shares to be issued by SPIC Preferred Company No.5 Ltd., a wholly owned subsidiary of State Power Investment Corporation Limited (SPIC, A1 negative). The rating reflects the junior subordinated ranking of preference shares and the intragroup financing arrangements that benefit from guarantees from SPIC and a keepwell deed from SPIC in favor of the preference shares. The rating outlook is negative due to the negative outlook on China's sovereign rating.

Key Takeaways:

  • The A3 rating on the preference shares is two notches below SPIC's A1 issuer rating, reflecting the junior subordinated ranking of preference shares.
  • The intragroup financing arrangements benefit from the unconditional, irrevocable senior unsecured guarantee provided by SPIC to the issuer.
  • SPIC's A1 issuer rating incorporates its Baseline Credit Assessment (BCA) of ba1 and a six-notch uplift based on the very high extraordinary likelihood of support from, and the very high dependence on the Government of China (A1 negative).
  • SPIC's ratings are sensitive to a potential decline in the rating or credit quality of the central government.
  • The ratings also consider the following environmental, social and governance (ESG) factors: elevated carbon transition risk, physical climate risks, and waste and pollution risks.
  • A rating upgrade is unlikely, given the negative outlook. A return of the outlook to stable could lead to a stable outlook.
  • A rating downgrade is likely if the sovereign rating is downgraded, the government's willingness to support weakens, or the company's BCA weakens significantly.

Statistics:

  • SPIC's total installed capacity is 237.46 GW, with 30% coal, 11% hydro, 4% nuclear, and 55% other clean energy or renewables.
  • SPIC is one of China's "big five" central government-owned power producers.
  • SPIC is 90% owned by the State-owned Assets Administration and Supervision Commission (SASAC) of the Chinese government and 10% owned by Social Security Funds.

Sources:

  • Moody's Investors Service
  • "Unregulated Utilities and Unregulated Power Companies" methodology, published in December 2023 (https://ratings.moodys.com/rmc-documents/412151)
  • "Government-related Issuers" methodology, published in May 2025 (https://ratings.moodys.com/rmc-documents/443641)
  • Moody's Rating Methodologies (https://ratings.moodys.com)

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