Moody's lowers GCL New Energy

Moody's Investors Service said it downgraded GCL New Energy Holdings Ltd.'s corporate family rating to Caa1 from B3 and its senior unsecured debt rating to Caa2 from Caa1.

"The downgrade reflects the accelerating pressure on GCL New Energy's liquidity and rising refinancing risks, particularly given $500 million bond maturing January 2021," said Ivy Poon, a Moody's vice president and senior analyst, in a press release.

"The prolonged negotiations regarding its planned asset sales and delays in the receipt of government subsidies further exacerbate this refinancing risk," added Poon.

Moody's said it estimates the company has nearly RMB 12.5 billion of debt maturing through March 2021, with a bridge loan from China Huaneng Group Co., Ltd. and the $500 million of bonds accounting for more than half of the maturing debt.

“However, the company does not have adequate internal financial resources to meet the huge funding gap, and there does not appear to be any meaningful plan to manage refinancing risk,” the agency said.

The outlook is negative.

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