Fitch trims Red Star Macalline

Fitch Ratings said it downgraded Red Star Macalline Group Corp. Ltd.'s long-term foreign currency issuer default rating, its senior unsecured rating and the rating of its $300 million 3 3/8% senior notes due 2022 issued by subsidiary Hong Kong Red Star Macalline Universal Home Furnishings Ltd. to BBB- from BBB.

The outlook is stable.

“The downgrade reflects our expectation that the company will continue to leverage up above 7.0x adjusted net debt/EBITDAR between 2018 and 2020 because of continued heavy capex and rising operational expenses as it pursues a fast-track expansion,” the agency said in a news release.

“RSM's 2017 leverage rose to 6.5x, from 5.7x in 2016, when it increased the total number of self-operated malls by five and managed malls by 51, with another 22 self-operated malls and 612 managed malls in the pipeline. Leverage at this level and RSM's low coverage, as measured by a recurring EBITDAR/gross interest plus rent ratio of 2.2x, no longer justifies a BBB rating.”

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.