S&P rates Zoomlion notes BB+

Standard & Poor's said it assigned a BB+ rating and cnBBB+ Greater China regional scale rating to a proposed issue of senior unsecured notes guaranteed by Zoomlion Heavy Industry Science and Technology Co. Ltd.

Zoomlion HK SPV Co. Ltd. will issue the notes.

The rating is the same as the corporate credit rating on Zoomlion to reflect credit support from the company, S&P said.

The agency said it expects Zoomlion's ratio of priority debt-to-total assets to remain below the threshold of 15% for speculative-grade debt over the next two years.

The proceeds will be used to fund overseas expansion, including enhancing its distribution and service network and establishing research and development centers and manufacturing facilities, S&P said.

The notes issuance will slightly increase the company's debt-to-EBITDA ratio to 2.5x to 3.0x in 2013 from the base case of 2.2x to 2.5x, the agency said.

The ratings reflect the company's high revenue concentration, significant working capital requirements, credit sales and execution risk, Fitch said.

Zoomlion's strong market position, product diversity and good profitability temper those weaknesses, the agency said.

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