Fitch downgrades Wuzhou

Fitch Ratings said it downgraded Wuzhou International Holdings Ltd.'s long-term foreign-currency issuer default ratings to CCC from B-.

Wuzhou's senior unsecured ratings also were downgraded to CCC from B- with the recovery rating remaining at RR4.

The downgrade reflects the sustained weakening of Wuzhou's financial position as demand for its main trade center product remained weak amid poor business sentiment among small and medium enterprises, Fitch explained.

Wuzhou's adjusted inventory increased by ¥643 million to ¥13.8 billion in the 12 months that ended in June, the agency said, but net debt rose by a much larger ¥1.7 billion to ¥5.7 billion over the same period.

This reflects the large cash drain given its high selling, general and administrative costs and interest expenses, Fitch said.

This has increased the refinancing risk for its capital market debts that fall due from 2018, the agency added.

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