Hong Kong, February 05, 2018 -- Moody's Investors Service has assigned provisional (P)A1 ratings to two series of bonds to be issued by China Eastern Airlines Corporation Limited under its credit enhanced bonds issuance programme.
Series [ICBC LC Bonds] will be supported by an irrevocable standby letter of credit (SBLC) from Industrial and Commercial Bank of China Limited, acting through its Shanghai Municipal Branch (ICBC, Shanghai Branch).
Series [BOC LC Bonds] will be supported by another irrevocable SBLC from Bank of China Limited, acting through its Tokyo Branch (BOC, Tokyo Branch).
The head offices of both ICBC, Shanghai Branch and BOC, Tokyo Branch have been assigned a long-term Counterparty Risk Assessment (CR Assessment) of A1(cr).
Issuer: China Eastern Airlines Corporation Limited
.... Series [ICBC LC Bonds] JPY  per cent. Bonds due , assigned (P)A1
.... Series [BOC LC Bonds] JPY  per cent. Bonds due , assigned (P)A1
The ratings of the bonds address the expected loss posed to investors by the legal final maturity date.
Moody's issues provisional ratings in advance of the final sale of the securities. The ratings, however, only represent Moody's preliminary credit opinion. Upon conclusive review of the transactions and associated documents, Moody's will endeavor to assign a definitive rating to the bonds. A definitive rating may differ from a provisional rating.
Moody's ratings address only the credit risks associated with the transaction. Other non-credit risks have not been addressed, but may have a significant effect on yield to investors.
Moody's analysis of the transaction is based primarily on the payment obligations of the two SBLC providers to support the JPY-denominated payment of the respective series of bonds through the respective SBLCs.
The (P)A1 ratings of the bonds are based on the CR Assessment of the head office of the respective SBLC provider. The SBLCs are irrevocable and constitute an unsecured and unsubordinated obligation of the respective SBLC provider.
The issuer is not rated.
Deutsche Bank AG, Hong Kong Branch is the account bank and principal paying agent of both series of bonds. Each of the above rated series will have its own series segregated bank accounts. Funds deposited in the bank account of a series will only be used to pay amounts due for such series of bonds.
The principal methodology used in these ratings was Rating Transactions Based on the Credit Substitution Approach: Letter of Credit-backed, Insured and Guaranteed Debts published in May 2017. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.
FACTORS THAT WOULD LEAD TO AN UPGRADE OR DOWNGRADE OF THE RATINGS:
Any change to the long-term CR Assessment of the SBLC providers could lead to a corresponding change in the ratings of the bonds.