Fitch downgrades Fujian Yango

Fitch Ratings said it downgraded Fujian Yango Group Co., Ltd.'s long-term foreign-currency issuer default rating to B- from B with a stable outlook.

Fujian Yango's senior unsecured rating and the ratings of its outstanding bonds also were downgraded to B- from B' with recovery ratings of RR4.

The downgrades reflect the heightened risk that Fujian Yango's interest expense at the parent level may outpace its improving cash income due to the increase in its debt, Fitch said, and keep its cash income-to-interest expense ratio of less than 1.2x for a sustained period.

The ratings are supported by the company's high B category aggregate business profile with high-quality cash flow generated by its major businesses and investments, the agency said.

The company generates cash flows from minority investments in operating subsidiaries and the direct operations of a small, but growing, education business, Fitch said.

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