S&P rates Fujian Yango notes B-

S&P said it assigned its B- long-term issue rating to the proposed dollar-denominated senior unsecured notes by Yango (Cayman) Investment Ltd., a subsidiary of Fujian Yango Group Co. Ltd., which will guarantee the notes.

“We rate the proposed senior unsecured notes one notch below the issuer credit rating on Fujian Yango to reflect structural subordination risk. As of Dec. 31, 2019, Fujian Yango’s capital structure consisted of about Chinese renminbi (RMB) 83.2 billion in secured debt and RMB 56.1 billion in unsecured debt (including external guarantees). As such, the secured debt ratio of about 60% is above our notching threshold of 50%,” S&P said in a press release.

The company intends to use the proceeds primarily to refinance its offshore maturities of about $300 million due in September.

“We believe the proposed notes issuance will relieve some short-term refinancing pressure for Fujian Yango. It will also slightly push forward the maturity wall, considering the company is facing about $630 million offshore senior unsecured notes maturing in the next 12 months,” S&P said.

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