S&P lowers Jiangsu New Headline, Zhiyuan Group

S&P said it lowered the long-term corporate credit rating on Jiangsu New Headline Development Group Co. Ltd. to BB from BB+.

S&P also said it lowered the long-term Greater China regional scale rating on the company to cnBBB- from cnBBB.

The agency also said it lowered the long-term corporate credit rating on HK Zhiyuan Group Ltd. to BB- from BB and affirmed its long-term Greater China regional scale rating at cnBB+.

The agency also said it lowered the rating on the dollar-denominated senior unsecured notes issued by Zhiyuan Group (BVI) Co. Ltd. to BB- from BB and affirmed the long-term Greater China regional scale rating on the notes at cnBB+.

Zhiyuan unconditionally and irrevocably guarantees the notes.

The outlook is stable.

Jiangsu New Headline is a construction services provider and one of the largest financing and investment companies of the Lianyungang municipal government.

The downgrades are due to a belief that the Lianyungang municipal government's weakened credit quality will continue to constrain these companies' credit profiles over the next two years, S&P said.

The Lianyungang government's deteriorated creditworthiness reflects the city's weaker revenue growth and still strong infrastructure investment that push up its debt burden, the agency said, along with higher contingent liabilities than fiscal revenues.

But, S&P also said it expects the city to maintain a high level of investment in public infrastructure in 2017 through 2019 to bolster its economic growth.

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