S&P lowers GCL New Energy

S&P said it lowered the long-term issuer credit rating on GCL New Energy Holdings Ltd. to B+ from BB-.

The agency also said it lowered the rating on the company's senior unsecured notes to B from B+ and removed the ratings from CreditWatch, where they were placed with negative implications in August 2018.

The negative outlook reflects a view that the company's liquidity will continue to deteriorate over the next 12 months, which could potentially result in a further downgrade.

The company's capability to generate cash flows will be strained over the next 12 months due to delays in renewable subsidy payments and rising interest expenses.

S&P said it expects the parent group to provide limited support to GCL New Energy given its own financial strength also has significantly weakened due to overcapacity in China's solar material sector.

The overall tightened liquidity environment in China also adds to the company's liquidity weakness, particularly since the company is a privately owned, the agency said.

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