Moody’s cuts China Minmetals, debt to Baa1

Moody's Investors Service said it downgraded the issuer rating of China Minmetals Corp. to Baa1 from A3.

At the same time, the agency downgraded the dollar-denominated senior unsecured debt ratings of the bonds issued by Minmetals Bounteous Finance (BVI) Ltd. and guaranteed by China Minmetals to Baa1 from A3.

The outlook is negative.

This action concludes the review initiated on Jan. 22.

Moody’s said the downgrade reflects: (a) The weak state of earnings in the company's metal and mining portfolio due to the material decline in global base metal prices; and (b) deteriorated credit metrics and expectation of high albeit improved leverage, as measured by adjusted debt/EBITDA, of around 7 times by the end of 2017.

China Minmetals' Baa1 ratings combines its downgraded baseline credit assessment (BCA) of ba3 from ba2 and a five-notch uplift based on an expected very high level of support from the Chinese government (Aa3 negative) under Moody's joint default analysis approach for government-related issuers.

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