S&P lowers Red Star Macalline

S&P said it lowered its long-term issuer credit rating on Red Star Macalline Group Corp. Ltd. to BBB- from BBB.

The outlook is negative.

At the same time, the agency lowered its rating on the outstanding dollar-denominated senior notes issued by Hong Kong Red Star Macalline Universal Home Furnishings Ltd to BB+ from BBB-.

Red Star unconditionally and irrevocably guarantees the notes.

“We lowered the ratings to reflect Red Star's deteriorating credit profile due to its expansion and acquisition appetite, higher operating risks in its franchise business model, and margin compression as the company expands into lower-tier cities,” S&P said in a news release.

“The company also faces rising risks and uncertainty in its capital raising activities.”

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