S&P hikes ChemChina

S&P said it raised China National Chemical Corp. Ltd.’s (ChemChina) issuer ratings to A- from BBB. Concurrently, the agency affirmed its A- long-term issuer ratings on Sinochem Hong Kong (Group) Co. Ltd., its BBB+ long-term issuer ratings on Sinochem International Corp., and the BBB long-term issuer ratings on China National Bluestar (Group) Co. Ltd., and revised the outlooks on these three entities to stable from developing.

“Sinochem Holdings Corp. Ltd. is the new parent and main credit driver for the four rated entities in the group. We assess the overall group's credit quality to be on par with that of Sinochem Group, which reflects our view of a very high likelihood of government support in case of financial stress, due to its importance to China's agriculture industry,” S&P said in a press release.

“Sinochem Holdings' financial leverage is very high as it takes over ChemChina's hefty debt. We project the group's debt-to-EBITDA ratio will range between 8.1x-9.4x in 2021-2023, from 10.2x in 2020. Its EBITDA interest coverage ratio will improve to 2.7x-3.1x in the same period, from 2.2x last year,” S&P said.

The stable outlooks reflect Sinochem Holdings' credit quality will remain steady and that it has a very high likelihood of receiving extraordinary government support in the coming two to three years, the agency said.

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