S&P lowers eHi Car Services

S&P said it trimmed its ratings for eHi Car Services Ltd. and its senior unsecured notes to B from B+.

“Covid-related lockdowns and slower cash collection from car disposals have reduced eHi's liquidity buffer. Covid-related disruptions have affected cash collection from used-car sales,” the agency said in a press release.

“In some cases, the time gap between receiving cash proceeds and vehicle sales has been extended to six months or longer, causing a 30% increase in gross receivables as of Dec. 31, 2021. Partly as a result, the company's cash balance decreased to below Chinese renminbi (RMB) 700 million at the end of March versus short-term maturities of about RMB 1.3 billion. While we expect a large portion of short-term maturities will be rolled over by banks and other financial institutions, this still represents a meaningful reduction in the company's liquidity buffer,” S&P said.

The outlook is negative.

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