Moody's snips Sino-Ocean

Moody's Investors Service said it downgraded Sino-Ocean Group Holding Ltd.'s corporate family rating to Caa1 from B3.

Currently, the agency lowered to Caa1 from B3, the backed senior unsecured ratings on the bonds issued by Sino-Ocean Land Treasure Finance I Ltd., Sino-Ocean Land Treasure Finance II Ltd., and Sino-Ocean Land Treasure IV Ltd. and guaranteed by Sino-Ocean Group, and to Caa3 from Caa2, the subordinated, guaranteed perpetual capital securities issued by Sino-Ocean Land Treasure III Ltd. and guaranteed on a subordinated basis by Sino-Ocean Group.

Finally, the agency changed all the outlooks to negative from ratings under review. These actions conclude the review for downgrade started on April 4, Moody’s said.

"The downgrades reflect Sino-Ocean Group's heightened refinancing risks in view of its weak liquidity, declining sales and profit margins, as well as sizable refinancing needs," said Cedric Lai, a Moody's vice president and senior analyst, in a press release.

"The negative outlook reflects the uncertainties over the company's ability to address its refinancing needs given its weak financial standing and uncertain funding access," Lai added. Among its debts, the company’s $700 million bond is due in July 2024.

Moody’s said it forecasts Sino-Ocean Group's EBIT/interest coverage to stay in the anemic range of 0.9x-1x over the next 12-18 months from 1x in 2022 while its debt/EBITDA remains elevated at 17x-19x over the same period, versus 18.6x in 2022.

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