S&P downgrades Shandong Sanxing

S&P said it lowered the long-term issuer credit rating on Shandong Sanxing Group Co. Ltd. to B+ from BB-.

The agency also said it lowered the long-term issue rating on the company's guaranteed senior unsecured notes to B+ from BB-.

The outlook is stable.

The downgrades reflect Shandong Sanxing's deteriorating capital structure and liquidity due to an increasing reliance on short-term debt amid tight credit market conditions in China, S&P said.

The company's access to long-term debt funding has reduced even as it faces a material amount of debt maturing in the next 12 months, the agency explained.

Although S&P said it believes Sanxing will be able to refinance its debt maturities in 2019, it will again face a wall of maturities in 2020.

But the company's more prudent capital spending and good banking relationships temper the risks, the agency added.

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