Fitch lowers Lanzhou to junk

Fitch Ratings said it downgraded Lanzhou Construction Investment (Holding) Group Co., Ltd.'s (LZJT) long-term foreign- and local-currency issuer default ratings to BB+ from BBB-. The agency also lowered the rating on its $300 million of 4.15% senior unsecured notes due Nov. 15, 2022, issued by City Development Co. of Lan Zhou and guaranteed by LZJT, to BB+ from BBB-.

The downgrade reflects a revised assessment of the financial implications of default to 'strong' from 'very strong' and support record to 'moderate' from 'strong' under the agency’s rating criteria, leading to a lower government-related entity score,” Fitch said.

The agency said it revised the GRE score because the government's fiscal support did not meet Fitch's expectation of improving LZJT's profitability, especially in the loss-making public transport segment, resulting in the company's financial profile remaining at a weaker level for an extended period.

The outlook is negative.

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