S&P sinks Shandong Yuhuang

S&P said it downgraded Shandong Yuhuang Chemical Co. Ltd. and its senior unsecured notes to D from CC after the company failed to repay its RMB 500 million onshore bond within the five-business-day imputed grace period.

“In our view, Yuhuang’s nonpayment of this debt will extend to most of its other obligations, mainly the onshore bond puttable on Dec. 12, 2019, and the offshore bond due on March 27, 2020. We believe it is highly likely that bondholders will exercise the put option for the bond puttable in December 2019. We also believe the company does not have enough financial capacity to make timely and full repayment on its obligations. This underpins our assessment that Yuhuang’s general default is commensurate with a rating of D instead of SD,” said S&P in a press release.

The default is considered a default on the $300 million of notes the company guarantees. Holders of the notes can demand their principal and unpaid interest. If the noteholders of at least 25% in total principal demand for early repayment, an acceleration of payment for all the principal and unpaid interest of the dollar-denominated notes will automatically take place, S&P said.

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