Moody's downgrades Fosun

Moody's Investors Service said it downgraded to B1 from Ba3 the corporate family rating of Fosun International Ltd. and to B1 from Ba3 the senior unsecured rating on the bonds issued by Fortune Star (BVI) Ltd. and guaranteed by Fosun.

Moody's also changed the outlook to negative from ratings under review. This concludes the review for downgrade that started on June 14.

"The downgrade reflects Fosun's weak liquidity profile, elevated refinancing pressure due to the challenging onshore and offshore funding environment, and the execution risks related to its asset divestment plan amid slower economic growth and capital market volatility. In addition, the asset divestments will likely reduce the size, diversification and transparency of Fosun's investment portfolio, while a potential increased usage of asset pledges will lower the company's financial flexibility," said Lina Choi, a Moody's senior vice president, in a press release.

Risks to refinancing, asset sales to be used to repay Fosun’s debt maturing over the next 12 months and challenges in balancing liquidity needs and protecting investment portfolio quality account for the negative outlook, the agency said.

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