At the same time, both developments have no immediate impact on its Ba1 corporate family and senior unsecured bond ratings.

"The weak performances of its special steel and property businesses are within our expectations and have already been factored into the negative rating outlook," says Ivan Chung, a Moody's Vice President.

"But, the current delay of three months for trial production at its iron ore project in Western Australia is disappointing as it may jeopardize the project's economic returns and capacity to service debt. This is happening against a backdrop of declining iron ore prices and potential oversupply in the industry," adds Chung, also the international lead analyst for CITIC Pacific.

"In addition, there is low visibility on the timeline for the completion of the Australian project's remaining production lines, the operating costs for ore production, and total spending for the project," says Chung.

"On the other hand, in terms of mitigating factors, we take comfort from CITIC Pacific's diversified business portfolio, the stable performance of its operations in Hong Kong, and expected high support from its parent, the CITIC Group (Baa2, stable), based on the latter's strong track record of providing timely support," says Kai Hu, a Moody's Vice President and local market analyst for the company.

The parental support translates into 2-notches uplift from its standalone Ba3 rating.

Moody's also takes comfort from CITIC Pacific's sound liquidity position and its strong access to the domestic and international funding markets. It recently raised USD1.1 billion in long-term bonds and a HKD7.1 billion syndicated loan to refinance maturing loans and further lengthen its debt maturity profile.

Moody's will continue to monitor the progress of its iron ore project, the operating performance of its core businesses, and if the company or its parent will take further actions to maintain a credit profile appropriate for its current rating.

CITIC Pacific Limited 's ratings were assigned by evaluating factors that Moody's considers relevant to the credit profile of the issuer, such as the company's (i) business risk and competitive position compared with others within the industry; (ii) capital structure and financial risk; (iii) projected performance over the near to intermediate term; and (iv) management's track record and tolerance for risk. Moody's compared these attributes against other issuers both within and outside CITIC Pacific Limited 's core industry and believes CITIC Pacific Limited 's ratings are comparable to those of other issuers with similar credit risk.

Other Factors used in this rating are described in Analytical Considerations in Assessing Conglomerates published in September 2007.

CITIC Pacific Ltd, listed in Hong Kong, is a conglomerate 57.6% owned by CITIC Group Corporation. It was one of the first Chinese companies to list and invest outside of China. It is engaged in a range of businesses, including specialty steel manufacturing, iron ore mining, property development and investment, power generation, infrastructure, communications and distribution.

CITIC Group Corporation, headquartered in Beijing, is a conglomerate investment company wholly owned by the State Council of the Chinese government. As of end-2010, it had total consolidated assets of HKD193 billion.

The Local Market analyst for this rating is Kai Hu, +86 (10) 6319-6560.

Ivan Chung Vice President - Senior Analyst Corporate Finance Group Moody'sInvestors Service Hong Kong Ltd. 24/F One Pacific Place 88 Queensway Hong Kong China (Hong Kong S.A.R.) JOURNALISTS: (852) 3758 -1350 SUBSCRIBERS: (852) 3551-3077 Gary Lau MD - Corporate Finance Corporate Finance Group JOURNALISTS: (852) 3758 -1350 SUBSCRIBERS: (852) 3551-3077 Releasing Office: Moody's Investors Service Hong Kong Ltd. 24/F One Pacific Place 88 Queensway Hong Kong China (Hong Kong S.A.R.) JOURNALISTS: (852) 3758 -1350 SUBSCRIBERS: (852) 3551-3077 (C) 2012 Moody's Investors Service, Inc. and/or its licensors and affiliates (collectively, "MOODY'S"). All rights reserved.

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