Moody’s lowers Yanzhou Coal

Moody's Investors Service said it downgraded the corporate family rating of Yanzhou Coal Mining Co. Ltd. to B2 from Ba3.

Moody's also said it downgraded the senior unsecured debt ratings of the bonds issued by Yancoal International Resources Development Co., Ltd. to B2 from Ba3 and senior unsecured debt rating of the perpetual bonds issued by Yancoal International Trading Co., Ltd.

The senior unsecured bonds and the senior unsecured perpetual bonds are guaranteed by Yanzhou Coal.

Moody's also said it revised the outlook to negative from stable.

The downgrades conclude a review that began in January due to the downward shift in the mining sector, the agency said.

The downgrades reflects higher financial risk arising from an expected rise in the company's debt as it increases capital spending over the next two years when coal prices will likely remain low, Moody’s said.

The downgrades also consider that Yanzhou Coal's liquidity position will weaken as its levels of short-term debt and capital-expenditure increase, the agency added.

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