Fitch downgrades Zhongliang

Fitch Ratings said it downgraded Zhongliang Holdings Group Co. Ltd.'s long-term foreign-currency issuer default rating to C from B- and the senior unsecured rating on Zhongliang's outstanding U.S. dollar senior notes to C from B-, with the recovery rating remaining at RR4.

The downgrades follow Zhongliang's announcement that it launched an exchange offer and consent solicitation to exchange $290 million of bonds outstanding due on May 19 and $440 million of bonds outstanding due on July 9 for bonds due in April 2023 and December 2023, respectively, Fitch said.

“Fitch considers the effective extension of the bond maturity by nine to 19 months as a distressed debt exchange (DDE) as per Fitch's criteria, although there is an incentive fee offered and no reduction in principal and interest. If the proposed transaction is successfully completed, the IDR will be downgraded to 'RD' (Restricted Default). Fitch will then reassess Zhongliang's credit profile to determine an IDR consistent with the company's post-transaction capital structure and risk profile, which would likely be within a very low speculative-grade range,” Fitch said in a press release.

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