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Fitch lowers Zhongrong Xinda
Fitch Ratings said it downgraded Zhongrong Xinda Group Co., Ltd.'s long-term foreign-currency issuer default rating to BB- from BB.
Fitch also said it downgraded the company's senior unsecured rating and the rating on its $500 million 7¼% senior notes due 2020, which were issued by Zhongrong International Resources Co., Ltd., to BB- from BB.
The outlook is negative.
The one-notch downgrade reflects the higher-than-expected rise in Zhongrong Xinda's leverage in 2017, which resulted from the company's acquisition of a certain financial investment, as well as elevated working capital outflow and capital expenditure, Fitch said.
Leverage improved in the first quarter of 2018 after Zhongrong Xinda repaid ¥8.6 billion in short-term borrowing, the agency said.
But, Fitch said it expects net leverage to remain at higher than 6x unless management completes its in planned disposal of certain financial assets and long-term equity investments.
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