Fitch: Railway ministry revamp will not impact ratings

CHINA'S plan to revamp the Ministry of Railways will not impact the ratings of China Railway Group Ltd, the nation's leading railway construction company, according to Fitch Ratings.

That's because the company's strategic importance to China will not change irrespective of the final details of the ministry's restructuring.

The central government announced over the weekend the debt laden Ministry of Railways will be split into two entities. The regulatory and administrative functions will be transferred to the Ministry of Transport while commercial operations will be given to a new state-owned company, China Railway Corp.

Details of the restructuring, including timing, have not yet been announced.

Fitch said it believes the proposed restructuring will not change the strategic importance of rail transportation in China. Railway investment will likely remain at levels as previously announced, it said.

The ministry accounts for the bulk of China Railway Group's revenue.

While it's uncertain which entity will take over the ministry's varying legal and financial obligations, China Railway Group, along with China Railway Construction Corp, will remain key railway construction companies in China, Fitch said.

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