Moody’s downgraded debt-strapped Fosun International to B2, with Negative outlook

 

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Rating agency Moody’s downgraded Fosun International by one notch to B2 from B1 and revised its outlook to ‘negative’ from ‘ratings under review’.

The significant decline in 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 sizable short-term debt in public bond markets, both onshore and offshore, given the current weak market sentiment.”

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.

The downgrade followed Fosun’s announcement last week that its units would sell a combined 60% stake in Nanjing Nangang Iron & Steel United for up to 16 billion yuan ($2.19 billion). The Chinese conglomerate and its units had earlier cut stakes in firms such as New China Life Insurance and Shanghai Yuyuan Tourist Mart Group.

Fosun on Monday said it had terminated business engagement with Moody’s rating service and ceased to provide relevant information to the agency from Oct. 12.