S&P downgrades Cofco (Hong Kong)

S&P said it lowered the long-term corporate credit rating on Cofco (Hong Kong) Ltd. to BBB+ from A-.

The agency also downgraded the dollar-denominated senior unsecured notes issued by Prosperous Ray Ltd., a wholly owned subsidiary of Cofco (Hong Kong), to BBB+ from A-.

The notes are guaranteed by Cofco (Hong Kong), S&P said.

Also downgraded was the long-term Greater China regional scale rating on Cofco HK and the notes to cnA+ from cnAA.

Cofco Hong Kong is a 100% owned subsidiary of Cofco Corp.

The outlook is stable.

The downgrades reflect an expectation that EBITDA interest coverage on the parent company will remain relatively weak and debt leverage to stay high over the next 12 months, S&P explained.

Cofco (Hong Kong) is considered a core subsidiary and the companies are rated with consolidated view of the group, the agency said.

The company’s cash flows will continue to be weak amid challenging consumer sentiment and weak commodity trading performance, S&P added.

The company’s strengthening scale and more diversified global operations support its business position, the agency added.

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