Fitch slashes Huarong Industrial to CCC

Fitch Ratings said it downgraded Huarong Industrial Investment & Management Co., Ltd.'s long-term foreign-currency issuer default rating to CCC from BB. Fitch also sliced the rating on the outstanding senior unsecured bonds issued by Huarong Universe Investment Holding Ltd. and guaranteed by Huarong Industrial to CCC/RR4 from BB. The ratings have been removed from rating watch negative.

“The downgrade was driven by a revision in Huarong Industrial's stand-alone credit profile (SCP) to ccc from ccc+. This was due to an ongoing lack of a refinancing plan for its capital market instruments maturing in 2022, and the reassessment of the linkage with parent China Huarong Asset Management Co., Ltd. (BBB/RWN) to weak from strong under our parent and subsidiary linkage (PSL) rating criteria,” Fitch said in a press release.

“Fitch thinks that Huarong Industrial's strategic ties with the parent have weakened, as there is no information to ascertain Huarong Industrial's status as a core subsidiary after China Huarong embarked on the first round of asset sales on Aug. 2, 2021, and no certainty that any government support to China Huarong will flow through to Huarong Industrial,” the agency said.

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