S&P downgrades Global TIP

S&P said it lowered to B+ from BB the long-term corporate credit rating on Global TIP Holdings Two BV, the holding company of TIP Trailer Services.

The outlook is stable.

The downgrade reflects both TIP’s higher leverage on a stand-alone basis as a result of its debt-financed growth over recent years, S&P said.

The downgrade also considers an assessment of HNA Group’s credit worthiness at B+. HNA Group is TIP’s 100% owner and parent company.

S&P said it does not generally rate a strong subsidiary higher than its weaker parent because the relatively weaker parent could take assets from the subsidiary or burden it with liabilities during times of financial stress.

HNA is a large Chinese conglomerate operating in the aviation, infrastructure, real estate, financial services, tourism and logistics sectors, the agency explained.

The group benefits from such large scale and diversification of operations, S&P said.

But the group’s financial policy is considered aggressive due to its acquisition strategy and high debt leverage, the agency said.

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