Fitch shifts Shanghai Electric view to negative

Fitch Ratings said it revised the outlook on Shanghai Electric (Group) Corp. (SEG) and its 54.55%-owned subsidiary, Shanghai Electric Group Co., Ltd. (SE) to negative from stable, and affirmed the issuer ratings at A-.

The agency also affirmed the companies’ foreign-currency senior unsecured rating at A- and withdrew all ratings.

“The outlook revision is based on our estimate that SEG's leverage would be higher than 2.5x, the level above which Fitch would consider negative rating action, during 2021-2022, due to weak profitability prospects following delivery of lower-margin energy engineering and construction (E&C) projects. However, SEG has plans to deleverage, including via land sales and reduction of capex and investments. The negative outlook reflects the execution risks associate with these deleveraging plans,” Fitch said in a press release.

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