China Construction Bank NZ outlook revised to stable by Fitch

Investing.com -- Fitch Ratings has updated the outlook of China Construction Bank (OTC:CICHF) (New Zealand) Limited's (CCB NZ) Long-Term Foreign-Currency and Local-Currency Issuer Default Ratings (IDRs) to Stable from Negative, while maintaining the 'A' rating. This change mirrors the outlook revision of the parent company, China Construction Bank Corporation (CCB), that occurred on April 8, 2025.

The ratings agency also confirmed CCB NZ's Short-Term IDRs at 'F1+' and the Shareholder Support Rating (SSR) at 'a'. These ratings are based on the 'Very High' likelihood of support from the parent company, CCB, which guarantees all senior unsecured obligations of the subsidiary, including deposits.

Fitch's confidence in the likelihood of support is reinforced by CCB's provision of a deed of guarantee, which ensures an irrevocable and unconditional guarantee of payment to all senior unsecured creditors of CCB NZ. This guarantee has no expiration date and no limit to the amount of obligations guaranteed.

The ratings agency has not assigned a Viability Rating to CCB NZ due to its strong ties with the parent company through management, strategy, and risk controls. The subsidiary also relies on the parent's brand name to attract customers and funding, making an independent credit strength assessment for the subsidiary irrelevant.

Fitch considers CCB NZ to have strong synergies with, and be strategically important to, the parent company. However, due to its small size, it is not an essential part of the group. This has been reflected by scoring CCB NZ's role in the group factor at one notch lower in the shareholder support assessment.

The SSR and Long-Term IDRs could face a downgrade if the parent's Long-Term IDR is downgraded. Fitch would also review the ratings if the parental guarantee is removed or altered. Any downgrade would likely be limited to one notch, assuming the parent's ability or propensity to support and CCB NZ's strategic importance remain unchanged.

On the other hand, an upgrade to the parent's Long-Term IDR would likely result in a similar upgrade in CCB NZ's SSR and Long-Term IDRs, provided there is no change in the parent's ability or propensity to support the subsidiary.

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