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Fitch lowers Hilong Holding
Fitch Ratings said it downgraded Hilong Holding Ltd.'s long-term foreign-currency issuer default rating to B+ from BB-.
The outlook is stable.
Fitch also said it downgraded Hilong's senior unsecured rating and the rating on its $250 million 7¼% notes due 2020 to B+ from BB- with recovery rating of RR4.
The downgrades reflect Hilong's slower-than-expected deleveraging due to sustained weak free cash flow generation, high working capital requirements and ongoing capital expenditure, the agency said.
The company's leverage improved to 4.3x at year-end 2017 from 4.8x in 2016, Fitch said.
Hilong's revenue recovered in 2017, rising by 38% year-over-year on strong drill pipe demand and expansion into overseas markets, the agency said.
However, margins fell due to a changed revenue and product mix and temporary shutdown at one of Hilong's production facilities in the second half of 2017, Fitch said.
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