Moody's turns Honghua view to negative

Moody's Investors Service said it revised Honghua Group Ltd.'s outlook to negative from stable and affirmed the company's B1 corporate family and senior unsecured ratings.

The outlook revision and affirmation follow Honghua's recent announcement that Kehua Technology Co., Ltd., a wholly-owned subsidiary of China Aerospace Science and Industry Corp. that owned 29.98% of Honghua's shares as of the end of June, agreed to transfer its ownership to Dongfang Electric International Investment Co., Ltd., a wholly-owned subsidiary of Dongfang Electric Corp., the agency said. Dongfang Electric is 90% owned by the State Council of China and 10% owned by the National Council for Social Security Fund of China, and is supervised by the State-owned Assets Supervision and Administration Commission of the State Council of China.

The transaction consideration is nil, and is subject to the approval by Sasac of the State Council in China.

"The outlook change to negative reflects Honghua's slower-than-expected deleveraging pace amid its business volatility," said Chenyi Lu, a Moody's vice president and senior credit officer, in a press release.

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