Moody's changes Citic outlook to negative

Moody's Investors Service said it changed to negative from stable the outlook for the Ba3 corporate family rating of Citic Resources Holdings Ltd. and for the Ba3 rating on the senior notes issued by Citic Resources Finance (2007) Ltd.

"The change in outlook reflects Citic Resources' weaker-than-expected operating performance in 2013 and our expectation that the downward commodity cycle and higher operating costs will continue to pressure the company's profitability and financial metrics over the next 12 to 18 months," Chenyi Lu, a Moody's vice president and senior analyst, said in an agency news release.

"The negative outlook also reflects Citic Resources' deteriorated credit metrics, which were driven by its weakened earnings and higher level of debt by the end of 2013 also due to double financing to prepare for bond redemption."

Despite about HK$7 billion of debt maturing in 2014, which includes a $800 million bond due in May, Moody's expects that the company will have little difficulty refinancing this debt given its HK$7 billion of cash on hand at the end of 2013 and its good access to bank credit given its association with the Citic Group (Baa2/stable).

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