S&P: Bright Food on developing watch

Standard & Poor’s said it placed the BBB- long-term corporate credit rating on Bright Food (Group) Co. Ltd. on CreditWatch with developing implications.

Also placed on developing watch was the BBB- long-term issue rating on the senior unsecured notes issued by Bright Food Hong Kong Ltd. and guaranteed by Bright Food.

S&P also placed the cnA- long-term Greater China regional scale rating on Bright Food and the notes on CreditWatch with developing implications.

The watch placement follows news that the Shanghai municipal government will inject Shanghai Liangyou Group Ltd., a government-owned grain and edible oil provider, into Bright Food, the agency said.

Limited details are available regarding the merger, S&P said.

The agency said it will review Bright Food’s role in the government after completing further discussions with management.

The likelihood of extraordinary government support for the company could improve because the combined entities will play a bigger role in the food supply and management of reserves of grains and edible oil for the Shanghai government, S&P said.

The merger also could weaken the financial risk profile of Bright Food, the agency said, because Shanghai Liangyou has a weaker profitability and higher debt leverage.

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