S&P downgrades Citic Resources

Standard & Poor’s said it lowered the long-term corporate credit rating on Citic Resources Holdings Ltd. to BB- from BB.

The agency also said it lowered the company’s Greater China regional scale rating to cnBB+ from cnBBB-.

The outlook is stable.

The downgrades reflect a view that the company’s profitability and financial leverage could weaken over the next two years because of reduced oil prices and a decline in the company’s sales volume, S&P said.

All of the company’s businesses are affected by weak prices of commodities, such as crude oil, coal and aluminum, the agency said.

The crude oil business, the key EBITDA contributor for the company, is expected to be hit hard by a larger fall in prices than expected, S&P said.

The company’s business risk profile is considered weak, reflecting the company’s small production capacity and geographic concentration in China and Kazakhstan, the agency added.

The stable outlook allows for an expectation that the company will continue to receive ongoing support from its parent over the next 12 months at least, S&P said.

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