Fitch slashes Kunming Rail

Fitch Ratings said it downgraded Kunming Rail Transit Group Co., Ltd.'s (KRTG) long-term foreign- and local-currency issuer default ratings and the ratings on its senior unsecured bonds to BBB- from BBB+ and left them on rating watch negative. The agency rates KRTG as a government-related enterprise.

“The downgrade reflects the change to KRTG as a GRE under the municipality, rather than the province, and the municipality's lower ability to support KRTG compared with the province. The assessment of the key rating drivers has also changed following this development,” Fitch said in a press release.

The RWN reflects the risk the company’s refinancing plan will have on KRTG's credit profile because the plan has not been completed, the agency said.

“We expect to resolve the RWN once the company has completed the plan to lower its funding cost and lengthen the debt tenor, and we have greater clarity over the impact of the plan. The RWN will be resolved within six months,” Fitch said.

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