S&P downgrades Citic Pacific

Standard & Poor's said it lowered the long-term corporate credit rating on Citic Pacific Ltd. to BB from BB+.

The outlook is negative.

S&P also said it lowered the rating on the company's outstanding senior unsecured notes to BB from BB+, along with the long-term Greater China regional scale rating on Citic Pacific and the notes to cnBB+ from cnBBB.

The downgrades reflect the company's highly leveraged financial risk profile, which is unlikely to improve over the next 12 to 18 months, said Lawrence Lu, an S&P analyst.

The downgrades also consider the delayed production at the conglomerate's key iron-ore project and challenging conditions for its core property development and special steel segments, Lu said.

The agency said it expects Citic Pacific's total debt to rise in 2013 because cash-flow generation from its core businesses will likely remain weak.

The conglomerate's results for the first half of 2013 were broadly in line with our expectation.

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