Moody’s cuts AVIC International bonds to Ba1

Moody's Investors Service said it downgraded the senior unsecured rating for the bonds issued by AVIC International Finance & Investment Ltd. and guaranteed by AVIC International Holding Corp. (AVIC International) to Ba1 from Baa3.

At the same time, the agency assigned a Ba1 corporate family rating to AVIC International and withdrew the company's issuer rating.

The outlook is negative. These actions conclude the review of AVIC International initiated on Nov. 12.

"The downgrade reflects our concern on the company's persistently high leverage, as a result of its aggressive land acquisition, low levels of profitability and consistently negative free cash flows from operations," Joe Morrison, Moody's vice president, senior credit officer and international lead analyst for AVIC International Holding, said in a news release.

Moody's expects that AVIC International Holding will register a debt/EBITDA around 11 times for full year 2015. This level would no longer support a Baa3 rating and would be weak for its lowered standalone credit profile.

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