S&P snips Yida China

S&P said it lowered the rating on Yida China Holdings Ltd. to CCC- from CCC because the agency believes a default or distressed exchange is highly likely within the next six months, absent significantly favorable changes in Yida’s circumstances.

“Yida may face difficulty in repaying its $300 million offshore senior notes due April 2020, in our view. With unrestricted cash of only Chinese renminbi RMB 1 billion as of Sept. 30, 2019, and unlikely new offshore issuance given its weak credit profile, the company is relying on other options, such as other new borrowings, cash collection from contracted sales and asset disposals, to repay the maturing notes. In addition, the company’s parent, China Minsheng Investment Group Corp. Ltd. (CMIG), is in discussion to sell its stake in Yida to a third party, which will likely improve the credit access of Yida. However, these options are under discussion, and we believe the execution risk makes timely repayment highly uncertain,” said S&P in a press release.

Besides notes coming due, Yida will also face other repayment pressure in 2020. The company has another RMB 7 billion in borrowings maturing in the period Sept. 30, 2019 to Dec. 31, 2020, including a RMB 800 million domestic corporate bond due September 2020. “We expect Yida’s capital structure will continue to be unsustainable even if it manages to repay the maturing notes, given its exceptionally weak liquidity,” S&P said.

The outlook is negative.

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