Moody's downgrades Yihua

Moody's Investors Service said it downgraded Yihua Enterprise (Group) Co., Ltd.'s corporate family rating to B3 from B2.

Moody's also said it downgraded the rating on the backed senior unsecured notes issued by Yihua Overseas Investment Ltd. to Caa1 from B3.

The notes are guaranteed by Yihua Group.

The outlook remains negative.

The downgrades reflect concerns that the volatility in the group's projected earnings coincides with Yihua Group's high refinancing needs, factors that will add to the group's liquidity risk over the next 12- to 18-months, Moody's said.

The volatility in Yihua Group's projected earnings is mainly driven by the weakened performance of Yihua Lifestyle, a key listed operating subsidiary of Yihua Group, the agency explained.

Yihua Lifestyle issued a profit warning with an expectation that its net profit will decline by 26% to 36% year-on-year in 2018, Moody's said.

The volatility in the group's operations will impair its access to funding and increasing its refinancing risk, the agency said.

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