Moody’s assigns B2 to Yango notes

Moody’s Investors Service said it assigned a B2 senior unsecured rating to the proposed dollar-denominated notes to be issued by Yango Justice International Ltd. and guaranteed by Yango Group Co., Ltd. The B2 senior unsecured rating for Yango’s guaranteed bonds is one notch lower than Yango’s B1 rating to reflect the risk of structural subordination.

Yango plans to use the proceeds mainly to refinance offshore debt.

“The proposed bond issuance, if completed as planned, will have limited impact on Yango’s credit metrics, as the company will mainly use the proceed to refinance existing debt,” said Celine Yang, a Moody’s assistant vice president and analyst, in a press release.

Moody’s said it expects Yango’s debt leverage, as measured by revenue/adjusted debt, will trend towards 60%-70% over the next 12-18 months from 50% for the 12 months ended June 30, driven by expected revenue growth. Meanwhile, its interest coverage, as measured by adjusted EBIT/interest, will improve to around 2.5x-3x from 2.3x over the same period, because of the expected revenue growth and the company’s stable profit margins.

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