S&P lowers China XD Plastics

S&P said it lowered the long-term corporate credit rating on China XD Plastics Co. Ltd. to B+ from BB-.

The agency also said it lowered the long-term issue rating on the senior unsecured notes issued by Favor Sea Ltd. to B from B+. China XD guarantees the notes.

S&P also said it lowered the long-term Greater China regional scale rating on the company to cnBB- from cnBB and on the guaranteed notes to cnB+ from cnBB-.

The outlook is negative.

The downgrades reflect a view that the company’s profitability and cash flows will weaken materially over the next two years on increasingly intense competition in China as automobile sales growth slows, S&P said.

The intense competition between automobile producers has a profound effect on auto parts suppliers, the agency explained, and on the modified plastics producers for automobiles.

An industry-wide margin compression is expected for those modified plastics producers that operate in an already highly fragmented market, S&P said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.