On December 23, 2016, S&P Global Ratings lowered its long-term corporate credit rating on Yingde Gases Group Co. Limited to CCC- from B- as well as the issue rating on its outstanding senior unsecured notes that Yingde guarantees to CC from CCC+. According to S&P Global, the downgrade reflects their view of an increased likelihood that Yingde will not make a timely payment of its Hong Kong dollar (HK$) 820 million offshore bank loan due Jan. 3, 2017, if it fails to secure new funding alternatives. “A failure to repay the loan could trigger a cross-default of the company’s other financial obligations, including an acceleration in payment of its outstanding U.S. dollar notes,” said S&P Global Ratings analyst Danny Huang.
On December 23, 2016, Moody’s Investors Service downgraded Yingde Gases Group Company Limited’s corporate family rating to Caa1 from B3 and its senior unsecured rating on the bonds issued by Yingde Gases Investment Limited and guaranteed by Yingde Gases to Caa2 from Caa1. “The downgrade of Yingde Gases’ corporate family rating to Caa1 reflects the high probability of a default on its offshore bond obligations, as the escalation of the shareholders’ dispute could cut off the company’s access to offshore funding and thereby its ability to repay its bank loan in early January,” says Gerwin Ho, a Moody’s Vice President and Senior Analyst. Read more on distressed companies.