S&P cuts eHi Car Services

S&P said it downgraded its ratings for eHi Car Services Ltd. and its senior unsecured notes to B from B+.

“We expect the company's weighted average debt maturity to drop and remain below two years. It has two major bullet maturities – the remaining two installments of the $195 million 2021 syndicated loan (due in April and October 2021) and $400 million of 2022 senior unsecured notes due in August 2022. We believe this reduces the margin of error for eHi's refinancing efforts and weighs on its liquidity,” S&P said in a press release.

The agency said its base case factors in the company will obtain onshore refinancing within the next six months.

Offsetting concerns about refinancing are recent covenant amendments expanding eHi’s operational and financial flexibility. “The amendments include the relaxation of EBITDA interest coverage requirement (from 3x to 2x for June 2020 testing and 2.5x for future testing), exclusion of the first-quarter EBITDA from covenant testing for full-year 2020, and addition of equity cure provisions,” S&P said.

The outlook is stable.

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