BEIJING: Global rating agency Moody’s downgrades Fosun International Limited by one notch and revises its outlook to ‘negative’ from “ratings under review”.
This comes after the firm divested more assets to ease liquidity and debt burdens.
The downgrade to B2 from B1 followed Fosun’s announcement last week that its units would sell a combined 60% stake in Nanjing Nangang Iron and Steel United for up to 16 billion yuan (US$2.19bil or RM10.4bil).
The Chinese conglomerate and its units had earlier cut stakes in firms such as New China Life Insurance and Shanghai Yuyuan Tourist Mart Group.
The “significant” decline in the market value of Fosun’s listed assets has eroded its funding headroom, Moody’s said, adding it estimated a roughly 30% drop in the market value of Fosun’s key holdings, between the end of June and Oct 20, due to shareholding dilution and share price falls.
“Moody’s expects Fosun to face difficulties in refinancing its sizeable short-term debt in public bond markets, both onshore and offshore, given the current weak market sentiment,” the rating agency said.
Fosun’s cash on hand at the holding company level is insufficient to cover its short-term debt maturing over the next 12 months, Moody’s said.
In response to a Reuters query, Fosun yesterday referred to their statement from Monday that the company had terminated their business engagement with Moody’s rating service and ceased to provide relevant information to the agency from Oct 12.
A Citigroup report on Tuesday said the company’s management planned to dispose of 50 billion to 80 billion yuan’s (US$6.8bil to US$11bil or RM32.2bil to RM52.1bil) worth of non-core assets within the next 12 months, including its non-controlling stakes in Alibaba-backed logistics platform Cainiao, resources and metals firm Jianlong and property assets.
Fosun plans to gradually repay the outstanding senior notes and increase borrowings from banks, the report said.
Bloomberg reported on Tuesday that Fosun was reviewing options for its European financial holdings.
The company did not make any comments on the Bloomberg story or the Citigroup report in response to queries from Reuters. — Reuters
