Fitch takes Yunnan Energy off watch

Fitch Ratings said it affirmed its BBB- ratings on Yunnan Provincial Energy Investment Group Co., Ltd. and its wholly owned subsidiary Yunnan Energy Investment (HK) Co. Ltd. and removed them from rating watch negative. The outlook on both companies is negative.

The agency simultaneously affirmed the ratings on YEIG's U.S. dollar notes at BBB- and the rating on its senior perpetual securities at BB+.

“Fitch has removed all the ratings from rating watch negative (RWN) in light of progress made by the Yunnan government in recent months to help Yunnan Health & Cultural Tourism Holding Group Co., Ltd. (Yunnan H&C), one of its largest and financially challenged provincial state-owned enterprises (SOE), to repay maturing debt and reduce debt. This has improved market sentiment towards Yunnan SOEs, and enabled YEIG to restore access to long-dated financing at a reasonable cost,” the agency said in a press release.

The negative outlook reflects the pressure on the Yunnan government to resolve liquidity crises at several large SOEs, Fitch noted. Yunnan H&C and Yunnan Provincial Investment Holdings Group Co. Ltd. (YIG), which owns 44.92% of Yunnan H&C, have large bond maturities in the first half of 2022.

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