S&P puts CAR on negative watch

Standard & Poor’s said it placed the BB+ long-term corporate credit rating and cnBBB+ long-term Greater China regional scale ratings on CAR Inc. on CreditWatch with negative implications.

The agency also said it placed the BB+ rating and cnBBB+ long-term Greater China regional scale ratings on the company’s outstanding senior unsecured notes on CreditWatch with negative implications.

S&P said it placed the ratings on CAR on CreditWatch following the recent change in the company’s controlling shareholding and senior management.

The emergence of UCAR, the car-hailing company that leases a substantial number of cars from CAR and is the largest shareholder in CAR could undermine CAR’s credit strength, the agency explained.

This is because UCAR’s high growth aspirations and weaker financial profile could result in CAR increasing capital spending and dividend payouts, S&P said.

The UCAR-CAR combination also may have a weaker credit profile than that of CAR on stand-alone basis, the agency said.

However, the changes in shareholding and management will likely increase integration between the companies, S&P added.

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