S&P snips eHi Car Services

S&P said it lowered its long-term issuer credit rating on eHi Car Services Ltd. and the long-term issue rating on its senior unsecured notes to B+ from BB-.

“We lowered the rating on eHi Car Services Ltd. because we expect the company’s leverage as measured by EBIT interest coverage to remain below 1.3x and funds from operations (FFO) to debt below 15% in the next 12-24 months. At the same time, the company’s operational and financial flexibility will likely remain strained as it manages tight debt covenants amid active growth appetite,” said S&P in a press release.

“A solid third-quarter performance brings slight margin and leverage recovery to eHi, but not sufficient to meaningfully improve its financial profile in our view. eHi expanded its fleet by about 7,700 cars in the first nine months of 2019, to 85,000 cars. A vast majority of fleet net additions took place in the third quarter which helped the company to capture strong seasonal demand due to a holiday spike. By our estimate, the company’s EBIT interest coverage improved slightly to 1.1x in the first nine months of 2019 from 1x in 2018, but still lower than our expectation of 1.3x-1.5x for 2019,” the agency said.

The outlook is stable.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.