Moody's snips West China Cement

Moody's Investors Service said it downgraded West China Cement Ltd.’s corporate family rating and senior unsecured ratings to Ba3 from Ba2 and kept the negative outlook.

"The downgrade and negative outlook reflect WCC's weakened credit and liquidity profiles driven by the company's rising leverage and increasing reliance on short-term debt. This is because the company's more aggressive business strategy has led to persistent large capital spending in overseas projects, which carry higher execution risks," said Roy Zhang, a Moody's vice president and senior analyst, in a press release.

"The rating action also considers the challenging operating environment facing WCC's domestic cement operations, though tempered by its strong market position in the Shaanxi region," Zhang added.

Moody’s, however, noted WCC dominates cement production in central and southern Shaanxi Province, and its long track record of operations. The agency also cited WCC's growing business diversification through its emerging presence in new markets outside of China, and business synergies with Anhui Conch Cement Co. Ltd., which raised its stake in WCC to 29.14% as of the end of 2022 from 21.1% as the end of 2020.

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