S&P lowers Beijing Automotive, BAIC

S&P said it lowered its ratings on Beijing Automotive Group Co. Ltd. and its BAIC Motor Corp. Ltd. to BBB from BBB+. At the same time, the agency dropped the long-term issue rating on BAG’s guaranteed senior unsecured notes to BBB from BBB+.

S&P removed all the ratings from CreditWatch, where they were placed with negative implications on April 3.

“BAG’s financial leverage will continue to worsen in 2020 following its deterioration in 2019. The company’s ratio of funds from operations (FFO) to debt dropped to 14.8% in 2019, below our expectation of close to 20%. This was mainly attributable to the debt-funded acquisition of a 5% stake in Daimler in July 2019. BAG also raised additional debt to increase its cash on hand amid uncertainties in the auto industry,” S&P said in a press release.

The outlook is negative.

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