Moody's downgrades Dr. Peng Telecom

Moody's Investors Service said it downgraded the corporate family rating of Dr. Peng Telecom & Media Group Co., Ltd. to Caa3 from Caa1.

At the same time, Moody's cut Dr. Peng Holding Hongkong Ltd.'s senior unsecured rating to Caa3 from Caa1. Dr. Peng Telecom guarantees the notes.

The downgrade follows the May 29 announcement by Dr. Peng Holding the majority of its noteholders have accepted the extension of the maturity date on its dollar-denominated notes by 18 months to Dec. 1, 2021 from June 1, 2020, with partial principal redemption before that date, Moody’s said.

“The extension represents an economic loss for noteholders as the original payment promises will not be met, thus triggering the downgrade. Moody's views this amendment as a way for Dr. Peng Telecom to avoid default given its constrained liquidity profile. The proposal can, therefore, be viewed as a distressed exchange, which is a default under Moody's definition,” the agency said in a press release.

The outlook is negative.

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