Fitch downgrades Hengdeli

Fitch Ratings said it downgraded Hengdeli Holdings Ltd.’s long-term foreign-currency issuer default rating and senior unsecured rating to B+ from BB.

The recovery rating is RR4.

The outlook is stable.

The ratings also were removed from Rating Watch negative, Fitch said.

The downgrades reflect Hengdeli’s higher business risk that led to continued financial deterioration in 2015, the agency said.

The Hong Kong and China market for luxury watches slowed down drastically in the second half of 2015, Fitch said, and there is little sign of imminent recovery.

The agency also said it expects the pressure on profitability to persist in 2016 due to the weak consumer spending, sales discounting and flattish distribution cost.

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