S&P lowers Power Construction

S&P said it lowered the long-term corporate credit rating on Power Construction Corp. of China to BBB+ from A-.

The agency also said it lowered the long-term Greater China regional scale rating to cnA+ from cnAA-.

The outlook is stable.

The downgrades reflect the company’s deteriorated credit metrics in 2015, which were worse than previous forecasts due to large capital expenditure and a buildup in its property inventory, S&P said.

The company’s debt-to-EBITDA ratio is expected to remain elevated as the company will most likely continue its material spending on capex and property development, the agency said.

But Power Construction’s interest servicing capacity is expected to stabilize going forward, which is helped by the supportive Chinese interest-rate environment, S&P said.

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