China Huarong Unit Rating Now Deep into Junk Territory at Fitch
(Bloomberg) -- Fitch Ratings downgraded one of China Huarong Asset Management Co.’s units deeper into junk territory, citing questions about future support from the parent and lack of a debt refinancing plan.
Huarong Industrial Investment & Management Co. was slashed to CCC from BB, with the firm no longer on watch for downgrade. Fitch said in a statement that the ratings cut was prompted by its reduction of the unit’s standalone credit profile, caused by the lack of a refinancing plan for 2022 maturities and its view on the unit’s linkage with China Huarong changing to “weak” from “strong.”
China Huarong has faced months of questions about its future, after the firm failed to release 2020 results by the end of March. Speculation has swirled about whether the state-owned manager of bad debt would require a restructuring of its own borrowings or a recapitalization. The company last week detailed plans to shed some assets.
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“We have been unable to confirm that Huarong Industrial remains a core subsidiary of China Huarong,” according to Fitch’s statement. Considering the parent’s own weakened state, “any support for Huarong Industrial would be likely to have to flow through from any potential support that the parent receives from the government,” the ratings firm said.
Huarong Industrial has 9 billion yuan ($1.4 billion) of bonds maturing in 2022, two yuan-denominated issues and a euro note, according to Bloomberg-compiled data.
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