Moody’s slashes Bluestar

Moody’s Investors Service said it withdrew China National Bluestar (Group) Co., Ltd.’s Baa2 issuer rating and assigned a Ba1 corporate family rating. The agency also downgraded the backed subordinated securities that Bluestar guarantees to Ba2 from Baa3.

The agency said it concurrently lowered to (P)Ba1 from (P)Baa2 the rating on the senior unsecured class and to (P)Ba2 from (P)Baa3 the rating on the subordinated class under its medium-term note (MTN) programs, issued by Bluestar Finance Holdings Ltd. and guaranteed by Bluestar.

Finally, Moody’s said it assigned a stable outlook. Previously the ratings were on review for downgrade.

“"The rating downgrade reflects Bluestar's much weaker stand-alone credit profile as indicated by the company's high financial leverage, as measured by Moody's adjusted debt/EBITDA, of more than 12x over the last 12 months of September 2023, up substantially from 4.8x in 2022. In addition, we expect that leverage will remain elevated and will only gradually improve towards 7.5x over the next two years amid industry challenges and product price volatility," said Gerwin Ho, a Moody's vice president and senior credit officer, in a press release.

"While we expect the company's business performance will likely improve and support a gradual earnings recovery, its capital structure will remain weak due to ongoing capital expenditure with a reduced buffer against market volatilities, a level that no longer supports an investment-grade rating," Ho added.

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