Moody's cuts Shanghai Electric

Moody's Investors Service said it lowered to Baa1 from A3 the issuer ratings of Shanghai Electric (Group) Corp. (SEGC) and the company's key subsidiary, Shanghai Electric Group Co. Ltd. (SHE).

Moody's also downgraded to Baa1 from A3 the ratings of the senior unsecured bond issued by Shanghai Electric Group Global Investment Ltd. and guaranteed by SEGC.

"The downgrade reflects our expectation that SEGC's leverage will remain elevated, as the potential debt reduction via asset monetization will not fully offset its EBITDA decline amid weak revenue and margin pressure over the next 12 months," said Gerwin Ho, a Moody's vice president and senior credit officer, in a press release.

SEGC's incident concerning delinquent account receivables also reflects weaknesses in its internal controls and governance practices, which constrain the company's ratings, the agency said.

The outlook remains negative.

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