December 15, 2006
A-: Baosteel Makes New Breakthrough in its Credit Ratings
On 14 December, Standard & Poor’s announced that the long term credit rating for Baosteel Group and Baosteel Ltd. have been raised from “BBB+” to “A-”, with stable outlook. This is the highest rate Baosteel has made since 1997. The rise of credit rating reflects Baosteel’s cost competitiveness, predominance of high value-added products in domestic market and the strong capacity of maintaining profit-making under unfavorable market conditions. It also reflects Baosteel’s constantly optimized financial structure, solid capital strength, moderate financial policies and the cautious attitude in merging and recombination activities. The result of this credit rating shows the overall affirmation of Baosteel’s comprehensive strength by Standard & Poor’s. It is understood that only Baosteel and POSCO of Korea were able to gain “A-”, among the steel makers of the world. In the 6 Chinese enterprises rated “A-” or above, Baosteel is the only manufacturing enterprise, to continue to be in the leading position among outstanding domestic enterprises. Baosteel started its credit rating by Standard & Poor’s in 1997, and gained, in the same year, “BBB+”, equivalent to China’s sovereignty rating. In 1998, considering the lowered sovereignty rating of China because of the Asian financial crisis on one hand and the uncertain outlook for the combination of Baosteel with Shanghai Steel and Meishan Steel on the other hand, the credit rating company worried that it was too risky and lowered Baosteel’s credit rating twice consecutively to “BB+”/ negative outlook. Facing the concerns of the credit rating company, Baosteel overcame difficulties and difficulties, and carried out a thorough revamping to Shanghai Steel and Meishan Steel by giving full play to Baosteel’s advanced production technology, management philosophy and management experiences. As a result, Baosteel smoothly past the running in period of recombination and its business performance advanced in successive years. In 2001, Standard & Poor’s raised Baosteel’s credit rating twice consecutively to “BBB-”, giving full affirmation to Baosteel’s efforts and achievements made after the recombination with Shanghai Steel and Meishan Steel. With the strategic objective for the new round development, Baosteel people of all levels, enterprising and innovative, steadily advance various strategic measures and have made new records repeatedly in business performance and financial performance. In 2003, for the first time, Baosteel ranked among the world top 500, position 372. In December the same year, Standard & Poor’s announced that Baosteel’s credit rating was raised to “BBB+”. In 2005, Baosteel’s position in top 500 advanced to No. 296, and Baosteel’s credit rating was raised constantly at the same time. Today, as Baosteel keeps advancing the “Going Out” strategy, the rise of the credit rating is of even greater significance, which will ensure Baosteel Group’s low cost financing in overseas capital market as well as being helpful for Baosteel to establish the image of an outstanding enterprise among overseas investment group.

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