Moody’s downgrades Yingde

Moody's Investors Service said it downgraded Yingde Gases Group Co. Ltd.'s corporate family rating to Ba3 from Ba2 and Yingde Gases Investment Ltd.’s senior bonds to B1 from Ba3. This concludes the review that began Nov. 10, and the outlook is negative.

"The downgrades reflect the considerable operating challenges Yingde Gases faces, stemming from its heavy exposure to the weak steel industry and the outstanding litigation against a major customer. These circumstances will increase the company's liquidity risk and keep its financial leverage elevated," Gerwin Ho, a Moody's vice president and senior analyst, said in an agency news release.

The agency said Yingde Gases' Ba3 corporate family rating reflects its leading position in the independent on-site industrial gas market in China and recurring cash flows from its long-term take-or-pay contracts with on-site customers, which account for more than 80% of its revenues.

On the other hand, its rating is constrained by its heavy exposure to the steel industry and client concentration, Moody’s added.

The negative outlooks reflects Moody's expectation that Yingde Gases' operating challenges and weak liquidity will keep its refinancing risk elevated over the next 12 to 18 months.

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