S&P lowers Yingde Gases

S&P said it lowered the long-term corporate credit rating on Yingde Gases Group Co. Ltd. to B- from BB.

The agency also said it lowered the rating on the outstanding senior unsecured notes that Yingde guarantees to CCC+ from BB-.

S&P also said it lowered the long-term Greater China regional scale rating on Yingde to cnB- from cnBB+ and on the notes to cnCCC+ from cnBB.

The agency also placed all of the ratings on CreditWatch with negative implications.

The downgrades reflect the increased liquidity risk and the potential negative implications on the company's operations and financing following a disagreement between shareholders over control of the company, S&P said.

The agency said it believes Yingde faces imminent risk relating to repayment of its RMB 700 million offshore loan that is due Jan. 3, 2017 because the company has halted a share placement, the majority of the proceeds were expected to repay the loan.

Yingde's proposal to amend the terms and conditions for the share placement may take a few months, S&P explained, and there is limited visibility on whether the regulator would approve the restructured share placement.

Yingde does not have sufficient cash on hand offshore to repay the loan and could delay payment if the bank refuses to provide an extension, the agency said.

S&P also said it believes the bank's willingness to extend the loan is uncertain.

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