Moody's trims Kunming Rail Transit

Moody’s said it lowered its ratings for Kunming Rail Transit Group Co., Ltd. and its dollar-denominated senior unsecured notes to Baa3 from Baa2 and placed all its ratings on review for further downgrade. The outlook has changed to ratings under review from negative.

“The downgrade reflects KRT's diminished liquidity buffer and uncertainties in the timeliness of government payments, which undermines the very close credit linkage with the government that is typical for China's metro companies.

“The ratings are on review for further downgrade, reflecting Moody's concern over the recovery of KRT's liquidity buffer to a level expected for a Baa3 rated issuer, and the adequacy and timeliness of government support for the company amid pressure on the capacity of Kunming city and Yunnan province to support their government-owned issuers, some of which are facing escalating refinancing challenges. Moreover, the uncertain recovery of the local economy and land market, combined with high debt and contingent liability burden, may constrain Kunming's ability to provide timely support to its local government financing vehicles (LGFVs),” the agency said in a statement.

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