Moody’s downgrades Sawit Sumbermas

Moody’s Investors Service said it downgraded the corporate family rating of PT Sawit Sumbermas Sarana Tbk., or SMSS, to B3 from B2. Moody’s also downgraded the senior unsecured rating on the $300 million notes issued by its wholly owned subsidiary, SSMS Plantation Holdings Pte. Ltd. to B3 from B2. The outlook is negative.

“The downgrade reflects our expectation that SSMS’ credit profile will be materially weaker than our previous expectation, weighed by negative earnings from its downstream operations, as well as by the limited transparency around its group operations amid significant related party transactions," said Maisam Hasnain, a Moody’s assistant vice president and lead analyst for SMSS.

SSMS’ corporate family rating mirrors the credit quality of its parent, Citra Borneo Indah, which consolidates SSMS. CBI’s credit metrics have weakened in recent years, partly due to operating losses and elevated capital spending associated with the development of its downstream operations, including a new palm oil refinery and industrial park, the agency said.

“As a result of continued operating challenges and uncertainty around when the refinery will materially improve its operations, we estimate CBI’s consolidated leverage will remain considerably higher than the 5.5x downward trigger for its previous B2 rating over the next 12-18 months,” said Hasnain.

Moody’s ups China Cinda Finance

Moody’s Investors Services said it upgraded China Cinda Finance (2015) I Ltd.’s and China Cinda Finance (2017) I Ltd.’s backed senior unsecured note ratings under their medium-term note programs to A3 from Baa1.

Moody’s also upgraded China Cinda Finance (2014) Ltd.’s backed senior unsecured note rating with a keepwell deed from China Cinda AMC and a guarantee deed by Cinda HK to A3 from Baa1.

The outlooks of China Cinda Finance (2014), China Cinda Finance (2015) I and China Cinda Finance (2017) I remain stable.

The upgrades on these senior unsecured note ratings consider an unconditional and irrevocable guarantee deed from Cinda HK, and Cinda HK’s A3 long-term issuer rating, which Moody’s assigned on Dec. 16. While the notes issued are supported by keepwell deeds and asset purchase deeds provided by China Cinda AMC, they are fully guaranteed by Cinda HK. The guarantees represent an unsubordinated and unsecured obligation of Cinda HK. The obligations rank pari equally with Cinda HK’s unsecured and unsubordinated obligations, Moody’s said.

Given that Moody’s assigned an A3 issuer rating to Cinda HK, the agency positioned the backed senior unsecured note ratings in line with the A3 long-term issuer rating of Cinda HK, the agency said.

Moody’s ups China Cinda Finance

Moody’s Investors Services said it upgraded China Cinda Finance (2015) I Ltd.’s and China Cinda Finance (2017) I Ltd.’s backed senior unsecured note ratings under their medium-term note programs to A3 from Baa1.

Moody’s also upgraded China Cinda Finance (2014) Ltd.’s backed senior unsecured note rating with a keepwell deed from China Cinda AMC and a guarantee deed by Cinda HK to A3 from Baa1.

The outlooks of China Cinda Finance (2014), China Cinda Finance (2015) I and China Cinda Finance (2017) I remain stable.

The upgrades on these senior unsecured note ratings consider an unconditional and irrevocable guarantee deed from Cinda HK, and Cinda HK’s A3 long-term issuer rating, which Moody’s assigned on Dec. 16. While the notes issued are supported by keepwell deeds and asset purchase deeds provided by China Cinda AMC, they are fully guaranteed by Cinda HK. The guarantees represent an unsubordinated and unsecured obligation of Cinda HK. The obligations rank pari equally with Cinda HK’s unsecured and unsubordinated obligations, Moody’s said.

Given that Moody’s assigned an A3 issuer rating to Cinda HK, the agency positioned the backed senior unsecured note ratings in line with the A3 long-term issuer rating of Cinda HK, the agency said.

Moody’s upgrades JBS

Moody’s Investors Service said it upgraded JBS SA corporate family rating to Ba2 from Ba3 and the senior unsecured ratings of its wholly owned subsidiaries JBS USA Lux SA and JBS Investments II GmbH to Ba2 from Ba3. The rating of the secured term loan under JBS USA Lux was upgraded to Ba1 from Ba2. The outlook is stable.

“The upgrade of JBS’ ratings to Ba2 is supported by the reduction in financial leverage and liquidity risk as a consequence of stronger operating performance and successful liability management initiatives between September 2018 and September 2019 that resulted in the extension of debt maturities and reduced funding costs,” said Moody’s in a press release.

JBS also repaid the normalization agreement, established in May 2018 for a total amount of R$12.2 billion, and originally due in 2021. The full repayment of the normalization agreement released about R$7.8 billion in collateral.

“JBS’ Ba2 ratings are supported by the strength of its global operations as the world’s largest protein producer and its substantial diversification across protein segments, geographies and markets. JBS’ strategy to expand its global footprint into value-added processed food segments has improved its business profile and will lead to more stable and stronger operating margin and cash flow over time. JBS’ robust liquidity position also supports the ratings. The company has a cash balance of $1.9 billion at the end of September 2019, plus $1.9 billion available under committed credit facilities, and no significant debt maturities until at least 2023,” said Moody’s.

Fitch revises Macao view to negative

Fitch Ratings said it revised the rating outlook on Macao to negative from stable and affirmed the long-term foreign-currency issuer default rating at AA.

“The negative outlook signals Fitch’s view that Macao’s large and rising economic, financial, and socio-political linkages with mainland China are consistent with a gradual convergence of their respective sovereign ratings. This was also among the drivers of Fitch’s downgrade of Hong Kong’s long-term foreign-currency IDR in September,” said Fitch in a press release.

Fitches said its AA rating on Macao is two notches above that of mainland China and rests on the assumption that the territory’s governance, rule of law, economic policy framework and business and regulatory environments remain distinct from that of the mainland.

“These assumptions are now evolving as China’s Special Administrative Regions (SARs) become more closely integrated into the national governance system, which has been accelerated by events in Hong Kong, as well as via policy initiatives such as the Greater Bay Area, which seek to enhance long-term regional growth opportunities by more closely integrating the economies of southern China,” Fitch said.

Moody’s assigns A3 to Cinda HK

Moody’s Investors Service said it assigned A3 local-currency and foreign-currency issuer ratings to China Cinda (HK) Holdings Co. Ltd. At the same time, Moody’s assigned a ba1 baseline credit assessment to Cinda HK. This is the first time Moody’s assigned ratings to Cinda HK.

The outlook on Cinda HK and its long-term issuer ratings is stable.

Cinda HK’s A3 long-term issuer rating incorporates the company’s a BCA of ba1, and a four-notch increase based on Moody’s estimate of a very high level of indirect support from the Chinese government via its parent China Cinda Asset Management Co., Ltd. in times of stress, as well as its reliance on the Chinese government, Moody’s said.

The ba1 BCA rating considers the company’s significant asset quality and the liquidity risks associated with its distressed asset management business, weak capital adequacy and high financial burden as a result of its acquisition of Nanyang Commercial Bank, Ltd.in 2016 and weakened profitability due to its increased provisions and need to bear some of the interest expenses for its parent, Moody’s said.

NYCB accouned for about 80% of Cinda HK’s assets as of Dec. 2018. Cinda HK benefits from the bank’s robust standalone credit profile, Moody’s said.

Moody’s assigns Ba1 to Goldwind

Moody’s Investors Service said it assigned a Ba1 corporate family rating to Xinjiang Goldwind Science & Technology Co. Ltd. and withdrew the company’s Baa3 issuer rating.

These actions conclude Moody’s review for downgrade started on Sept. 16.

“The rating actions reflect our expectation that the company’s heightened financial leverage over the next two years is unlikely to recover to levels supporting an investment-grade credit profile,” said Ivy Poon, a Moody’s vice president and senior analyst, in a press release.

The agency estimates that Goldwind’s leverage, as measured by adjusted funds from operation (FFO)/debt and adjusted debt/EBITDA, will register 7-7.5% and 8x-8.5x in 2019, respectively, and improve moderately to 10%-11% and 6.5x-7x during 2020-21. These levels will position Goldwind at the Ba ratings level, Moody’s said.

Moody’s said it sees Goldwind pursuing ambitious expansions in wind power capacity, resulting in elevated leverage over the next two years. Moody’s projected the company’s capital expenditure will reach RMB 12 billion -RMB 12.5 billion in 2019, and RMB 8 billion - RMB 9 billion annually during 2020-21.

“Goldwind’s aggressive capacity expansion will continue to pressure its leverage, although the recent recovery in its manufacturing businesses provides some relief to its weakened financial profile,” said Poon.

The rating outlook is stable.

Fitch rates China Cinda (HK) A

Fitch Ratings said it assigned China Cinda (HK) Holdings Co. Ltd. long-term foreign- and local-currency issuer default ratings of A. The outlook is stable.

Cinda HK is a wholly owned subsidiary of China Cinda Asset Management Co., Ltd., which Fitch rates A. It is the major offshore financing and operating arm of China Cinda. It holds the group's investment stake in Nanyang Commercial Bank, Ltd. and facilitates the group's cross-border projects. Cinda HK’s revenue is primarily from net interest income, service fees and investment returns, the agency said.

“Cinda HK’s entire board and senior management are appointed by Cinda, and its business activities are conducted under the parent’s direction. The issuer’s financials are also consolidated into those of its parent,” said Fitch in a press release.

The company contributed 10%-17% of Cinda’s consolidated net profit and accounted for about a third of the parent’s consolidated total assets in 2016-2018. “However, we consider Cinda HK’s credit quality to be weaker than that of its parent because its operations are aimed at providing funding to the group and the stake in Nanyang Commercial Bank is held as an investment on behalf of the group,” Fitch said.

S&P revises Bolivia view downward

S&P said it revised its outlook on Bolivia to negative from stable. At the same time, S&P affirmed the BB- long-term foreign and local currency sovereign credit ratings.

“The negative outlook reflects the at least one-in-three likelihood of a downgrade in the next six to 18 months if continued political uncertainty, poor GDP growth prospects, or further erosion of the government’s fiscal metrics contributes to current account deficits (CADs) that weaken the country’s external profile. The uncertainty caused by the national elections in 2019, followed by protests and a change in political leadership, has in our opinion weakened the country’s macroeconomic pillars, resulting in higher government debt and potentially greater vulnerability to negative external shocks,” said S&P in a press release.

“Regardless of who wins the next elections, the new leadership is likely to confront a divided Congress and a polarized society, which in our opinion could limit the capacity to make broad reforms,” S&P said.

S&P shifts Shriram Transport view downward

S&P said it revised the outlook to negative from stable for Shriram Transport Finance Co. Ltd.

“We revised the outlook to negative to reflect the increased risk of a deterioration in STFC’s asset quality, which could also affect availability of credit to the company over the next 12 months or so. We have progressively lowered our growth expectations for India during 2019 such that we now expect the country’s GDP to grow at 5.1% in fiscal 2020 (year ending March 31, 2020) and 6.5% in fiscal 2021,” said S&P in a press release.

The negative outlook on STFC reflects a one-in-three chance that STFC’s asset quality will deteriorate over the next 12 months or so, which would lead S&P to lower the rating, the agency said.

Concurrently, S&P affirmed the BB+ long-term issuer and long-term issue ratings on STFC’s senior secured notes.

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