Only five months after coming to the dollar market with a US$3.4 billion deal, China Petroleum Corp (Sinopec) was back on September 6, pricing four tranches of bonds totaling US$3.25 billion.

Sinopec sold US$700 million of three-year bonds at 2.25%, US$1.4 billion of five-year bonds at 2.5%, US$750 million of ten-year bonds at 3.25%, and US$400 million of thirty-year bonds at 4%. The ten-year bonds priced at 120 basis points over US Treasuries.

Bookrunners were Bank of China, Bank of Communications, ICBC, ANZ, BBVA, Citi, Commonwealth Bank, Goldman Sachs, HSBC, ING, UBS and United Overseas Bank.

Moody's Investors Service assigned an A1 rating to the senior unsecured bonds which were issued by Sinopec Group Overseas Development (2017) Limited and guaranteed by China Petrochemical Corporation (Sinopec Group).

According to Moody's, the rating reflects Sinopec Group's dominant positions in China's energy and chemical industries, highly integrated business portfolio, strong liquidity profile, and strategic importance to the Chinese government. Sinopec Group is the largest refiner in terms of crude distillation capacity in China, and the second-largest oil & gas producer in terms of production volume.

Sinopec Group's rating also incorporates Moody's expectation of a very high level of support from the Chinese government, based on Sinopec Group's strategic importance to the Chinese economy, its government ownership, the good track record of support from the government, and reputational risks for the government should the company default.

Moody's expects that Sinopec Group's performance will remain stable in the next 12-18 months. Its projection is based on the assumption of an average Brent price at around US$50 per barrel and a refining margin of around US$8 per barrel. It expects Sinopec's large retail and marketing business, and petrochemical business to earn stable profit margins.

China Petrochemical Corporation is 100% owned by the Chinese government. It is one of the largest enterprises owned by the State Council's State-owned Assets Supervision and Administration Commission. China Petrochemical Corporation holds an approximate 71.32% stake in China Petroleum and Chemical Corporation.

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