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Moody's downgrades Huachen Energy
Moody's Investors Service said it downgraded Huachen Energy Co., Ltd.'s corporate family rating to Ca from Caa1 and senior unsecured rating to Ca from Caa2.
The outlook remains negative.
The downgrades were prompted by heightened concern over its already weak liquidity position and a view that the company might have difficulty in meeting the upcoming interest coupon payment for its $500 million senior unsecured notes, Moody's said.
Huachen Energy recently announced it defaulted on one of its domestic bank loans, another sign of increasing challenges in repaying its maturing debt obligations, the agency said.
Huachen Energy is required to make interest coupon payments on the $500 million senior unsecured notes, Moody's said, and RMB 2 billion worth of domestic bonds are due over the next 30 days.
The agency said it is concerned about the company's ability to meet these debt-service obligations, as well as other short-term debt that falls due in the next few months.
The negative outlook reflects the high level of uncertainty around Huachen Energy's ability to meet its short-term debt obligations, Moody's added.
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