Moody's: Texhong outlook stable

Moody's Investors Service said it changed the outlook to stable from negative for Texhong Textile Group Ltd. and affirmed its Ba3 corporate family and senior unsecured debt ratings.

"The stable outlook reflects Texhong's ability to gradually recover its profit margin to a level close to that for 2008 in an environment of declining cotton prices," Alan Gao, a Moody's vice president, said in a statement.

"Moreover, its expansion in Vietnam will provide some additional buffer to its exposure to cotton price risk," Gao said.

With improving profit margins, credit metrics are expected to improve to 2.5x to 3.0x for the adjusted debt to EBITDA and 3.5x to 4.0x for the EBITDA to interest.

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