Fitch downgrades Yuzhou Group

Fitch Ratings said it downgraded Yuzhou Group Holdings Co. Ltd.'s long-term foreign-currency issuer default rating to B+ from BB-. Fitch also trimmed the senior unsecured rating and the rating on its outstanding U.S. dollar senior notes' to B+ from BB-, with an RR4 recovery rating.

“The downgrade is driven by Yuzhou's weaker-than-expected revenue recognition in 2020, which reflects its high reliance on sales through unconsolidated joint ventures (JVs) and associates relative to peers,’ Fitch said in a press release.

Fitch noted Yuzhou’s 2020 revenue of CNY 10 billion was down 55% from 2019, despite garnering total contracted sales of CNY 105 billion in 2020, CNY 75 billion in 2019 and CNY 56 billion in 2018.

The outlook is stable.

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