Fitch downgrades Shandong Snton

Fitch Ratings said it downgraded Shandong Snton Group Co., Ltd.'s (Snton) long-term foreign-currency issuer default rating to RD (restricted default) from BB as the company did not repay ¥138 million in bank acceptance drafts and loans.

Fitch also said it downgraded the senior unsecured rating to C with recovery rating of RR4 from BB and withdrew the rating as it is no longer considered relevant to the agency's coverage because the company is not expected to proceed with a U.S. dollar bond issuance.

The non-payment is consistent with an RD rating, signifying the uncured expiry of any applicable grace period, cure period or default forbearance period following a payment default on a material financial obligation, the agency explained.

Snton recently announced it is being sued by the Hebei Bank Qingdao Branch for the failed payment, Fitch said.

The bank's liquidity is weak, but does not indicate that company is unable to repay debt of only ¥139 million. It appears management has intentionally chosen not to repay the loan to Hebei Bank, Fitch said.

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