S&P downgrades Zoomlion

Standard & Poor’s said it lowered the long-term corporate credit rating on Zoomlion Heavy Industry Science and Technology Co. Ltd. to B+ from BB.

The outlook is negative.

The agency also said it lowered the ratings on $400 million in 6 7/8% senior unsecured notes due 2017 and $600 million in 6 1/8% senior unsecured notes due 2022 issued by Zoomlion HK SPV Co. Ltd. to B+ from BB. Zoomlion guarantees the notes.

S&P also lowered the long-term Greater China regional scale rating on Zoomlion and on its guaranteed notes to cnBB- from cnBB+.

The downgrades are due to the company’s weaker-than-expected 2014 performance due to weak market demand, intense competition and Zoomlion’s increased customer credit risks, the agency said.

The company’s financial leverage has increased drastically over the past six months, S&P said, and there is limited prospect for improvement in the next 12 months.

Zoomlion could face losses and cash-flow constraints if the credit quality of its customers continues to deteriorate, the agency said.

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