S&P slashes YanAn Bicon

S&P said it downgraded YanAn Bicon Pharmaceutical Listed Co.’s issuer rating to CCC- from CCC+, citing risks over the company’s ability to repay upcoming maturities.

“We see significant uncertainties in YanAn Bicon refinancing plans for its hefty debt maturities in December 2020 and April 2021. The company has RMB 350 million debt maturing in December 2020 and RMB 350 million in April 2021. It does not have sufficient resources to repay these obligations and is pursuing several financing options, including new bank loans, asset disposal, and potential support from the local government,” S&P said in a press release.

S&P noted as of March, the company had RMB 100 million of cash and negative free operating cash flow.

The two upcoming maturities are the outcome of talks with domestic bondholders. The bonds’ maturity was April 2021, but the holders exercised the put option in April 2020, S&P said.

“Through negotiations, YanAn Bicon was able to come to the current agreement with split maturities in December 2020 and April 2021, respectively. In our view, this incident impairs YanAn Bicon’s bond market access,” S&P said.

The outlook is negative.

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