S&P cuts Shanghai Electric

S&P said it lowered its long-term issuer credit ratings on Shanghai Electric Holding Group Co. Ltd. (SEHG) and its core subsidiary, Shanghai Electric Group Co. Ltd. to BBB+ from A-. The agency also trimmed the long-term issue rating on SEHG’s guaranteed senior unsecured notes to BBB+ from A-.

“SEHG's financial metrics will likely remain weak in 2022 due to pandemic disruptions and potential additional provisions. We downgraded SEHG and Shanghai Electric after the group reported a larger-than-expected loss in 2021, mainly related to high provision for receivables at a subsidiary. While the new management team is working to improve internal controls, Covid-19's resurgence in China could delay the group's profit turnaround and deleveraging with an already weakened credit profile,” S&P said in a press release.

The agency also noted the group is based in Shanghai, which remains locked down because of Covid.

The outlook is negative.

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