© Reuters. FILE PHOTO: A company logo of Fosun International is seen during the annual general meeting of the Chinese conglomerate, founded by billionaire Guo Guangchang, in Hong Kong, China May 28, 2015. REUTERS/Bobby Yip
BEIJING/HONG KONG (Reuters) – Global rating agency Moody’s (NYSE:) downgraded Fosun International Limited by one notch on Tuesday and revised its outlook to ‘negative’ from ‘ratings under review’, 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 & 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.
The “significant” decline in the market value of Fosun’s listed assets has eroded its funding headroom, Moody’s said in a statement, adding that it estimates a roughly 30% drop in the market value of Fosun’s key holdings between end 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,” 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.
Fosun did not immediately respond to a request for comment.
Fosun on Monday said it has terminated business engagement with Moody’s rating service and ceased to provide relevant information to the agency from Oct. 12.
($1 = 7.3089 renminbi)
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