Moody's current ratings on CITIC Pacific Limited are:

Long Term Corporate Family (domestic and foreign currency) ratings of Ba1

Senior Unsecured (foreign currency) ratings of Ba1

Senior Unsecured MTN Program (foreign currency) ratings of (P)Ba1

RATINGS RATIONALE

The Ba1 rating of CITIC Pacific reflects the fundamental Ba3 credit profile of CITIC Pacific and two notches of uplift for strong potential financial support from the CITIC Group. The CITIC Group -- which is wholly-owned by the Chinese State Council - has demonstrated its financial support towards CITIC Pacific when it incurred severe losses from leveraged foreign exchange contracts in 2008.

The Ba3 standalone rating reflects its diversified business portfolio, which includes cyclical sectors, such as property development and steel, and those that provide more stable cash flow, which include investment properties, tunnels, Dah Chong Hong (trading), power generation, and CITIC 1616 (telecoms).

However, the Ba3 standalone rating incorporates the company's high level of leverage and the expectation that this leverage will only improve till the commercial operation of its iron ore mine in Australia. The rating also reflects the challenges faced by its core business segments, that is, special steel and property development. The operating environments across these sectors are inherently cyclical.

Overall, we expect that CITIC Pacific's debt level will continue to rise and its credit metrics will remain weak for its standalone Ba3 rating level, at least for the next one to two years.

Rating Outlook

The negative outlook reflects Moody's concern regarding the uncertainties on the progress of the iron ore project and downward pressure on its property development and special steel business.

What Could Change the Rating - Up

As the rating has a negative outlook, it's not likely that it will be upgraded in the near to medium term. The rating outlook could revert to stable if (1) the Sino Iron project progresses according to its current schedule and successfully ramps up to generate operating cash flow as projected, and (2) CITIC Pacific improves its liquidity profile and lowers its financial leverage through the sales of further assets, or if it raises more equity, or has more restrained capital spending, such that adjusted Fund Flow From Operation(FFO)/debt trends above 10%.

What Could Change the Rating - Down

The rating could be downgraded if (1) the Sino Iron project misses its milestones or incurs further material cost overruns, (2) the operating performance of its other core businesses falls short of our expectations; and 3) the company's liquidity profile deteriorates.

Credit metrics that Moody's will consider for an downgrade include adjusted debt/capitalization above 55-60%, and adjusted FFO/Debt failing to trend above 10% in 2013.

Should there be a downgrade of CITIC Group Corporation's rating, its support level and hence the rating uplift for CITIC Pacific would be revisited.

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.

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

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