Moody's reviews Haiken for downgrade

Moody's Investors Service said it placed on review for downgrade the Baa2 issuer rating of Hainan State Farms Investment Holding Group Co., Ltd. (Haiken), and the Baa2 senior unsecured rating on the bond issued by Hainan State Farms International (HK) Co., Ltd. and guaranteed by Haiken. The outlook is changed to rating under review from stable.

"The review for downgrade reflects our expectation that Haiken's credit profile could weaken with debt leverage becoming elevated if the company's proposed acquisition of a maximum 70.8% stake in Halcyon Agri Corp. (HAC) is completed according to the company's plans of using internal resources and bank loans," said Ying Wang, a Moody's vice president and senior analyst, in a press release.

The agency said it estimates Haiken's leverage––as measured by debt/EBITDA––could linger above 7x on a pro forma basis from around 5.6x in 2021, depending on the company's final stake in HAC.

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