S&P cuts Guangxi Liuzhou Dongcheng

S&P said it lowered Guangxi Liuzhou Dongcheng Investment & Development Group Co. Ltd.’s issuer rating to B+ from BB. At the company’s request, the agency withdrew the rating.

“Liuzhou Dongcheng's liquidity position is weakening due to mounting short-term maturities. We see an increasing refinancing risk from the company's sizable short-term maturities. As of Sept. 30, 2021, we estimate the company had about RMB 25.7 billion of short-term debt outstanding, including a $300 million offshore bond maturing in September 2022, while cash and fixed deposits available for debt repayment was about RMB 7 billion,” S&P said in a press release.

The agency noted the company strongly relies on the capital markets to refinance its maturing debt obligations, and needs to borrow for interest expenses.

“The downgrade reflects our view that Liuzhou Dongcheng's refinancing efforts could be susceptible to market volatility. This is because the company's capital structure may not be sustainable,” S&P said.

The outlook is negative.

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