Moody’s cuts China Jinmao to junk

Moody's Investors Service said it cut the Baa3 rating on the dollar-denominated notes China Jinmao Holdings Group Ltd. guarantees to Ba1. The notes were issued by its subsidiary Franshion Brilliant Ltd. The also withdrew China Jinmao’s Baa3 issuer rating and assigned Ba1 corporate family rating.

Moody’s said it ended its review for downgrade and assigned a negative outlook.

"The rating downgrade reflects our expectation that China Jinmao's credit metrics are unlikely to recover to levels supportive of its previous Baa3 rating over the next two years because of its weakening sales and gross profit margins, as well as its maintenance of a high debt leverage to preserve liquidity amid volatile market conditions," said Cedric Lai, a Moody's vice president and senior analyst, in a press release.

"The negative outlook reflects uncertainties over the company's ability to recover its contracted sales, credit metrics and profit margins over the next six to 12 months in light of the challenging market conditions," Lai added.

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