Moody’s cuts China Communications Construction

Moody’s Investors Service said it downgraded to Baa1 from A3 the issuer rating of China Communications Construction Co., Ltd.

Moody’s also downgraded to Baa2 from Baa1 the ratings of the subordinated perpetual notes issued by CCCI Treasure Ltd. and guaranteed by China Communications. The company is owned by the state-owned China Communications Construction Group Ltd.

“The downgrade of CCCC’s issuer rating reflects our expectation that the company’s leverage will remain elevated over the next one to two years, driven by higher debt to fund public-private partnership (PPP) investments, and slow EBITDA growth, especially in its overseas businesses due to the coronavirus pandemic,” said Chenyi Lu, a Moody’s vice president and senior credit officer, in a press release.

The agency revised the outlook to stable from negative.

The stable outlook reflects the expectation that over the next 12 to 18 months, the company’s business and financial profiles will remain stable. The outlook also mirrors the importance of the company to its parent and to the central government, Moody’s said.

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