S&P lowers Yingde Gases

Standard & Poor’s said it revised the outlook on Yingde Gases Group Co. Ltd. to negative from stable.

The agency also said it affirmed the BB long-term corporate credit rating on the long-term BB- issue rating on the company’s senior unsecured notes.

Along with the outlook revision, S&P also said it lowered the company’s long-term Greater China regional scale rating to cnBB+ from cnBBB- and the notes to cnBB from cnBB+.

The outlook revision reflects the continued weak prospect for China’s steel sector, which accounted for 70% of Yingde’s oxygen capacity in operation at the end of 2015, S&P said.

Poor industry conditions, recent suspension of contracts with Yingde’s major customer and growth in receivables could keep the company’s ratio of debt-to-EBTIDA consistently above 4x, the agency said.

The outlook revision also reflects a view of the company’s weakening liquidity and good banking relationship and credit standing, S&P said.

The agency said it now forecasts Yingde’s ratio of debt-to-EBITDA to be 3.5x to 4x over the next two years, compared with previous projection of 3.2x to 3.5x.

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