Moody's downgrades Tahoe

Moody's Investors Service said it downgraded to Caa1 from B3 the corporate family rating of Tahoe Group Co., Ltd. Moody's also downgraded to Caa2 from Caa1 the backed senior unsecured rating on the notes issued by Tahoe Group Global (Co.,) Ltd. and guaranteed by Tahoe. The outlook changed to negative from stable.

"The downgrade reflects our concerns that weakening economic conditions will elevate Tahoe's refinancing risk, given its material amount of debt maturities over the next 12-18 months," said Josephine Ho, a Moody's vice president and senior analyst, in a press release.

Tahoe had sizable short-term debt of RMB 30.6 billion at the end of September, mainly coming from trust loans and onshore bonds. Moody's expects the company's cash holdings of RMB 14.7 billion at the end of September, together with its cash flow from operations will be insufficient to cover its debt maturities through March 2021.

The outlook on the ratings is negative, reflecting Moody's expectation Tahoe's debt-refinancing risk will remain elevated over the next 12-18 months.

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