S&P downgrades Zoomlion

S&P said it lowered the long-term corporate credit rating on Zoomlion Heavy Industry Science and Technology Co. Ltd. to B from B+.

The agency also said it lowered the long-term issue ratings to B from B+ on the $400 million 6 7/8% senior unsecured notes due 2017 and the $600 million 6 1/8% senior unsecured notes due 2022 issued by Zoomlion H.K. SPV Co. Ltd.

Zoomlion guarantees the notes, S&P said.

S&P also said it lowered the company’s long-term Greater China regional scale rating to cnB+ from cnBB- and its guaranteed notes to cnB+ from cnBB-.

The outlook is negative.

The downgrades reflect an expectation that the company's interest-serving capacity will deteriorate in the next 12 months, S&P said.

Zoomlion's business profitability also is expected to weaken because of declining revenue from sluggish demand in the construction-machinery sector and the company's high fixed-cost structure, the agency said.

But the company's cost-reduction efforts should partially offset some of the pressure on its top line, S&P added.

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