S&P lowers China Automation outlook, notes

Standard & Poor's said it revised the outlook on China Automation Group Ltd. to negative from stable.

The agency said it also lowered the Greater China credit scale rating on China Automation and that on the company's outstanding senior unsecured notes to cnBB from cnBB+.

At the same time, the agency said it affirmed the BB- long-term corporate credit rating on China Automation and the BB- issue rating on the notes.

"We revised the outlook to reflect our uncertainty over the prospects for China's railway industry over the next 12 to 18 months," said S&P credit analyst Jerry Fang in a news release.

"This is mainly because a major train accident at Wenzhou in July 2011 led many ongoing projects in the industry to either slow down or be suspended. Bidding for many new projects was also put on hold. The impact on China Automation is significant because the railway segment has accounted for about half of its total revenue over the past two years."

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