Moody’s cuts Beijing Automotive, bonds

Moody's Investors Service said it downgraded Beijing Automotive Group Co., Ltd.’s (BAIC Group) issuer rating to Baa1 from A3 and baseline credit assessment (BCA) to ba1 from baa3.

At the same time, the agency downgraded the senior unsecured rating on the bonds issued by BAIC Inalfa HK Investment Co., Ltd. and guaranteed by BAIC Group to Baa1 from A3.

The outlook is negative. This concludes the review initiated on Sept. 12.

"The downgrade reflects our expectation that BAIC Group's financial leverage will remain elevated over the next 12-18 months, given its high leverage in 2015 and the slower-than-expected deleveraging despite its robust sales performance," Moody's vice president and senior analyst Gerwin Ho said in a news release.

The downgraded Baa1 ratings incorporate BAIC Group's baseline credit assessment of ba1 and a three-notch uplift based on Moody's expectation of extraordinary support from the Beijing Municipal Government (unrated) to the company, under the agency’s joint default analysis approach for government-related issuers.

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