Fitch Ratings has upgraded AVIC International Holding Corporation's (AVIC International) Long-Term Foreign-Currency and Local-Currency Issuer Default Ratings (IDRs) and senior unsecured debt rating to 'BBB+' from 'BBB'. The Outlook is Stable.
The upgrade reflects Fitch's reassessment of AVIC International's notching from its parent, Aviation Industry Corporation of China (AVIC). In our view, rating AVIC International at two levels below AVIC would be more consistent with the rated universe in terms of applying a top-down approach and parent-subsidiary linkage.
AVIC International's notching reflects its lower revenue contribution to its parent from its core aviation segment and its lack of a core aviation manufacturing operation.
AVIC International has an integral position within AVIC through its key roles in developing overseas markets, setting up related businesses and expanding international investment in the global aviation industry. It is also tightly integrated into AVIC's core aviation manufacturing business in terms of subcontracting/outsourcing activities. Therefore, Fitch believes a two-level notch-down from its parent's rating would be more comparable with the rated universe.
