Fitch downgrades Tahoe

Fitch Ratings said it downgraded Tahoe Group Co., Ltd.’s long-term foreign-currency issuer default rating and senior unsecured rating to CC from CCC+. The recovery rating on its senior unsecured rating is RR4.

“The downgrade follows signs of constrained liquidity at various operating subsidiaries and weaker access to funding from non-bank financial institutions (NBFI). A lawsuit by Huaneng Trust, a substantial lender that Tahoe has cooperated with for years, suggests that the weakened funding access is not limited to smaller NBFIs. Fitch believes Tahoe faces material near-term refinancing risks, especially on a CNY 1.5 billion medium-term note due July 5, 2020,” the agency said in a press release.

The company plans to repay the note due July 5 through new onshore offerings. “Fitch understands that the new bond quota will only be approved by the regulator after Tahoe submits its 2019 annual results in mid-June, leaving less than 20 days for the issuance,” Fitch said.

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