China to take 1-2 yrs to rebuild infrastructure

13 May 2008 19:13  [Source: ICIS news]

HOUSTON (ICIS news)--The areas affected by China's earthquake could take one to two years to fully recover and rebuild their infrastructure, Standard & Poor's Rating Service (S&P) said on Tuesday.

The earthquake in southwest China's Sichuan province, which has killed around 12,000 people, has severely disrupted chemicals production and transport links in the region.

In addition to the current estimated death toll, 18,645 people were thought to be buried under debris in Mianyang in northern Sichuan, according to reports.

However, S&P said the damage should be manageable, and it will not likely cripple the regional economy, although rebuilding could take up to two years.

The amount of financial pressure felt by companies will depend on government relief measures and on individual insurance coverage, S&P said. Some companies could fall under extreme financial pressure if the earthquake disrupts their key operations or if they suffered substantial damage to assets, the service said.

Overall, the earthquake will not likely cause any significant effects to credit ratings of companies in China and Hong Kong that are followed by S&P - as none have any substantial assets concentrated in the area of the earthquake, the ratings service said.

Towngas China operates 14 piped gas projects in the affected Sichuan province, S&P said. Some of the projects have been affected, although this will not likely affect the credit profile of Towngas.

The exposure of Chinese insurance companies will not likely be large, since the hardest-hit areas were rural, according to Connie Wong, a credit analyst at S&P.

Generally, rural areas have limited coverage, Wong said. Nonetheless, it will take months before a clear assessment can form regarding insurance claims from the quake.

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By: Al Greenwood
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