Fitch trims Yuhuang Chemical

Fitch Ratings said it downgraded Shandong Yuhuang Chemical Co., Ltd.’s long-term issuer default rating to CC, from CCC+. Fitch has also downgraded the senior unsecured rating and the rating on Yuhuang’s senior unsecured dollar-denominated notes due 2020 to CC, with recovery rating of RR4, from CCC+ and RR4. RR4 reflects average recovery prospects for offshore creditors.

“The downgrade reflects Yuhuang’s high near-term risk of default on its maturing debt. This includes two of its domestic bonds totaling CNY1 billion – which can be put by bondholders for redemption in November and December, respectively – and the U.S. dollar notes due March 2020. Yuhuang has been working on several refinancing plans, but no material progress has been made so far. In addition, while the local government has provided support to Yuhuang over the past 12 months, whether such support can continue on a timely basis to allow the company to avoid default is uncertain,” said Fitch in a press release.

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