Moody’s drops Soho China, debt to Ba3

Moody's Investors Service said it downgraded Soho China Ltd.’s corporate family rating and the senior unsecured debt rating on its bonds due November 2022 to Ba3 from Ba2.

The outlook is negative. This concludes the review initiated on March 14.

"The downgrades reflect Moody's expectation that Soho China's credit metrics will remain weak for the next 12 - 18 months," Moody's assistant vice president and analyst Stephanie Lau said in a news release.

Soho China's credit metrics had already deteriorated in 2015, as EBITDA/interest coverage declined to 0.7 times to 0.8 times – after excluding fees related to the company's senior notes' tender and consent solicitation – from 3.1 times in 2014. Moreover, net debt/EBITDA rose to 9.4 times from 2.3 times, the agency said.

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