Fitch downgrades Honghua

Fitch Ratings said it downgraded Honghua Group Ltd.’s long-term issuer default rating to B- from B with negative outlook.

The agency also downgraded the company’s senior unsecured rating to B- from B with a recovery rating of RR4.

The downgrades reflect the deterioration of the company’s financials in a sharp industry downturn, Fitch said.

The company did not manage to unlock cash from working capital as revenue dropped dramatically. Margin also declined, which further pressured cash flow, the agency said.

The negative outlook reflects a view that the industry outlook remains uncertain, Fitch said.

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