Fitch Ratings has assigned expected ratings of 'A(EXP)' to Bank of China Limited's (BOC, A/Negative/bbb) proposed senior unsecured notes to be issued by the bank's Macau, Panama and Hungary branches under its USD40 billion medium-term note (MTN) programme.

The proposed issuances are sustainability bonds. Net proceeds will be used to finance or refinance eligible green and social projects, as defined in the Bank of China Limited Sustainability Series Bonds Management Statement, which are located in the Belt and Road Initiative partner countries.

A failure to comply with the relevant sustainability policies and requirements of the bank would not constitute an event of default under the terms and conditions of the notes. The final ratings are contingent upon the receipt of final documents conforming to the information already received.

Key Rating Drivers

BOC's Macau, Panama and Hungary branches are part of the same legal entity as BOC. Therefore, the proposed notes will represent BOC's direct, unconditional, unsecured and unsubordinated obligations and are rated in line with its Long-Term Issuer Default Rating (IDR).

BOC's IDR is underpinned by Fitch's expectations of a very high probability of support from the Chinese sovereign (A+/Negative) in the event of stress. Key rating drivers and sensitivities for BOC can be found in our last full Rating Action Commentary, Fitch Affirms Bank of China at 'A'; Outlook Negative, published on 3 June 2024.

Rating Sensitivities

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade

The expected ratings on the proposed notes would be downgraded if BOC's IDR is downgraded.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade

The expected ratings on the proposed notes would be upgraded if BOC's IDR is upgraded.

OTHER DEBT AND ISSUER RATINGS: KEY RATING DRIVERS

Fitch has assigned expected senior unsecured long-term ratings (xgs) of 'BBB (xgs) (EXP)' to the proposed notes, in line with BOC's Long-Term IDR (xgs), which is in turn aligned with the bank's Viability Rating.

OTHER DEBT AND ISSUER RATINGS: RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade:

A downgrade of the bank's Long-Term IDR (xgs) would lead to a downgrade of the expected senior unsecured long-term rating (xgs).

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade:

An upgrade of the bank's Long-Term IDR (xgs) would lead to an upgrade of the expected senior unsecured long-term rating (xgs).

Date of Relevant Committee

31 May 2024

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

Public Ratings with Credit Linkage to other ratings

The ratings on the proposed notes issued by BOC's Macau, Panama and Hungary branches are equalised with BOC's Long-Term IDR.

ESG Considerations

BOC has an ESG Relevance Score of '4' for Financial Transparency, as there are still structural issues around financial transparency and disclosure. Those are not captured in headline performance metrics in China and affect our assessment on the operating environment as well as the financial profile. This negatively affects the bank's credit profile and is relevant to the rating in conjunction with other factors.

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, ttps://www.fitchratings.com/topics/esg/products#esg-relevance-scores.

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