S&P: Jiangsu NewHeadLine, HK Zhiyuan to negative

S&P said it has revised its outlook on Jiangsu NewHeadLine Development Group Co. Ltd. to negative from stable and affirmed its BB+ long-term corporate credit rating.

In line with the outlook revision, the agency lowered the company’s long-term Greater China regional scale rating to cnBBB from cnBBB+.

In addition, S&P revised the outlook on HK Zhiyuan Group Ltd. (Zhiyuan) to negative from stable and affirmed its BB long-term corporate credit rating. In line with the outlook revision, the agency downgraded the company’s long-term Greater China regional scale rating to cnBB+ from cnBBB-.

S&P also lowered its long-term Greater China regional scale rating on the U.S. dollar-denominated senior unsecured notes issued by Zhiyuan Group (BVI) Co. Ltd., a special purpose vehicle, to cnBB+ from cnBBB-. Zhiyuan unconditionally and irrevocably guarantees the notes. At the same time, the agency affirmed the BB long-term issue rating on the notes.

S&P said it revised the outlooks on Jiangsu NewHeadLine and Zhiyuan because it believes the credit quality of the Lianyungang municipal government has weakened; the government owns 100% of Jiangsu NewHeadLine. In the agency’s view, Lianyungang's financial capacity to provide extraordinary support to Jiangsu NewHeadLine, if required, is likely to diminish further over the next 12 months.

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