S&P downgrades Yanzhou Coal

Standard & Poor’s said it lowered the long-term corporate credit rating on Yanzhou Coal Mining Co. Ltd. to BB- from BB.

The agency also said it lowered the rating on the outstanding senior unsecured notes that Yancoal guarantees to BB- from BB, along with its Greater China regional scale ratings to cnBB from cnBBB-.

The notes were issued by Yancoal’s subsidiary, Yancoal International Resources Development Co. Ltd.

S&P also removed all of the ratings from CreditWatch, where they were placed with negative implications in February.

The outlook is negative.

The downgrades are based on an expectation of continued weakness in coal industry fundamentals in China over the next 12 months, which could hurt the company’s cash flow and liquidity, S&P said.

Despite the recent slight recovery in coal prices in China, the agency said it remains cautious about the prospect in the country’s coal market in the next six to 12 months given the slowing economic growth, government shift from energy-intensive industries and pollution prevention, the agency said.

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