Moody's upgrades Yanzhou Coal

Moody's Investors Service said it upgraded Yanzhou Coal Mining Co. Ltd.'s corporate family rating to Ba2 from Ba3.

Moody's also said it upgraded the senior unsecured debt ratings on the bond issued by Yancoal International Resources Development Co., Ltd. to Ba2 from Ba3. The bond is guaranteed by Yanzhou Coal.

The outlook is stable.

The upgrades reflect an expectation that Yanzhou Coal's improved credit metrics will be sustained over the next 12 to 18 months, the agency said.

Yanzhou Coal recorded a strong performance in 2018, underpinned by around 9% year-on-year increase in the average selling price, Moody's said, along with a 17.7% year-on-year increase in its saleable coal volume to 113.9 million tons.

Moody's said it expects average domestic coal selling prices for the company will decline by around 10% in 2019 from the levels seen in 2018, due to slowing growth in domestic coal demand in China.

Nevertheless, the Chinese government's measures to regulate the supply side should prevent a deep and prolonged decline in domestic prices, the agency said.

The company's standalone credit profile also is supported by its diversified coal mining assets and related infrastructure, good quality coal in Australia and low cost mining operations in Shandong province, Moody's said.

These credit strengths are partly offset by its moderately high debt leverage following years of expansion and acquisitions, along with execution and financial risks related to its investments in the financial sector, the agency said.

© 2015 Prospect News.
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