Moody's cuts Lanzhou Construction

Moody's Investors Service said it downgraded to Ba2 from Ba1 the corporate family rating of Lanzhou Construction Investment (Holding) Group Co., Ltd. and the senior unsecured rating on the bonds issued by City Development Co. of Lan Zhou and guaranteed by Lanzhou Construction.

"The downgrade reflects Moody's assessment that the Lanzhou city government's capacity to support its local government financing vehicles (LGFVs) is weaker than earlier estimated, reflecting greater constraints from a relatively weak local financial sector with limited financial resources, amid our expectation of slowing growth in the provincial economy and property market in 2022," said Ying Wang, a Moody's vice president and senior analyst, in a press release.

The company has “sizeable maturing debts,” including about RMB 16 billion in bonds coming due within the next 12 months, and Moody’s said it sees Lanzhou Construction needing government help to meet its funding needs.

The outlook remains negative.

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