S&P cuts Shanghai Electric

S&P said it downgraded its issuer and unsecured notes ratings for Shanghai Electric Holding Group Co. Ltd. (SEHG) and Shanghai Electric Group Co. Ltd. (Shanghai Electric) to BBB from BBB+.

“We downgraded SEHG and Shanghai Electric because the group's deleveraging pace will likely be slower than our previous forecast. This is regardless of slightly better results for the first half of 2022 than we expected. Earnings pressure, high provisions, working capital strain, and heavy investment needs will keep SEHG's debt and leverage elevated over the next 24 months. We forecast SEHG's EBITDA interest coverage ratio will remain below 2x in 2023 while its debt-to-EBITDA ratio will stay materially above 5x,” S&P said in a press release.

The outlook is negative.

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