Fitch downgrades Shandong Yuhuang

Fitch Ratings said it downgraded Shandong Yuhuang Chemical Co., Ltd.'s long-term issuer default rating to CCC+ from B with negative outlook.

Fitch also said it downgraded the senior unsecured rating and the rating on Shandong Yuhuang's senior unsecured dollar-denominated notes due 2020 to CCC+ with recovery rating of RR4 from B with a recovery rating of RR4.

The notes were issued by its offshore special purpose vehicle, Rock International Investment Inc., which are guaranteed by Shangong Yuhuang.

The downgrades are mainly due to the company's deteriorating liquidity position as the company has not secured sufficient funding by mid-2019 to refinance short-term debt due over the next 12 months, including the $300 million of notes due in March 2020, the agency said.

S&P said it thinks Shangong Yuhuang may have some flexibility to delay capital expenditure so that it can cover its domestic debt obligations in 2019.

But the company does not believe it will have sufficient liquidity to address repayment of its dollar bonds, the agency noted.

The company said it had expected to secure sizable new facilities from domestic financial institutions, but those discussions have ended, S&P added.

The company continues to explore other funding channels, the agency said.

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