S&P downgrades Canadian Solar

S&P said it lowered the long-term corporate credit rating on Canadian Solar Inc. to BB- from BB, along with its long-term Greater China regional scale to cnBB from cnBBB-.

The outlook is negative.

The downgrade reflects an expectation that Canadian Solar’s leverage and profitability will continue to deteriorate in next 12 months, S&P said.

The company’s upstream manufacturing business will face challenges from intensive price competition, weak demand for solar modules and global overcapacity, the agency said.

As a result, S&P said it lowered the assessment of the company's business risk profile to weak from fair, along with its financial risk profile to aggressive from significant.

The company’s leverage also is expected to remain high, mainly due to the company's aggressive investment in downstream solar farm assets and the termination of a plan to launch a yield company that would hold the solar farm assets, the agency said.

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