S&P cuts Red Star Macalline

S&P said it trimmed its ratings on Red Star Macalline Group Corp. Ltd.’s issuer rating to BB from BB+ and guaranteed notes to BB- from BB.

“We lowered the rating on Red Star because we expect the company's operational risk to rise as industry growth slows and the effects from Covid-19 linger. Red Star's business model is less resilient to sector adversities than we previously expected,” the agency said in a press release.

S&P said it forecasts Red Star's debt-to-EBITDA ratio rising to 7.5x-8x in 2020 and about 7x in 2021, compared with 6.2x in 2019. This increase is mainly due to a drop in operating cash flow and EBITDA, with a mild rise in debt levels.

The outlook is stable.

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