Moody’s assigns Ba1 to Goldwind

Moody’s Investors Service said it assigned a Ba1 corporate family rating to Xinjiang Goldwind Science & Technology Co. Ltd. and withdrew the company’s Baa3 issuer rating.

These actions conclude Moody’s review for downgrade started on Sept. 16.

“The rating actions reflect our expectation that the company’s heightened financial leverage over the next two years is unlikely to recover to levels supporting an investment-grade credit profile,” said Ivy Poon, a Moody’s vice president and senior analyst, in a press release.

The agency estimates that Goldwind’s leverage, as measured by adjusted funds from operation (FFO)/debt and adjusted debt/EBITDA, will register 7-7.5% and 8x-8.5x in 2019, respectively, and improve moderately to 10%-11% and 6.5x-7x during 2020-21. These levels will position Goldwind at the Ba ratings level, Moody’s said.

Moody’s said it sees Goldwind pursuing ambitious expansions in wind power capacity, resulting in elevated leverage over the next two years. Moody’s projected the company’s capital expenditure will reach RMB 12 billion -RMB 12.5 billion in 2019, and RMB 8 billion - RMB 9 billion annually during 2020-21.

“Goldwind’s aggressive capacity expansion will continue to pressure its leverage, although the recent recovery in its manufacturing businesses provides some relief to its weakened financial profile,” said Poon.

The rating outlook is stable.

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