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BEIJING/HONG KONG (Reuters) -Global rating agency Moody’s (NYSE:MCO) downgraded Fosun International Limited by one notch on Tuesday and revised its outlook to ‘negative’ from ‘ratings under review’, after the firm divested more assets to ease liquidity and debt burdens.
The downgrade to B2 from B1 followed Fosun’s announcement last week that its units would sell a combined 60% stake in Nanjing Nangang Iron & Steel United for up to 16 billion yuan ($2.19 billion). The Chinese conglomerate and its units had earlier cut stakes in firms such as New China Life Insurance and Shanghai Yuyuan Tourist Mart Group.
The “significant” decline in the market value of Fosun’s listed assets has eroded its funding headroom, Moody’s said in a statement, adding it estimated a roughly 30% drop in the market value of Fosun’s key holdings between the end of June and Oct. 20, due to shareholding dilution and share price falls.
“Moody’s expects Fosun to face difficulties in refinancing its sizable short-term debt in public bond markets, both onshore and offshore, given the current weak market sentiment,” the rating agency said.
Fosun’s cash on hand at the holding company level is insufficient to cover its short-term debt maturing over the next 12 months, Moody’s said.
Fosun did not immediately respond to a request for comment.
Fosun on Monday said it had terminated business engagement with Moody’s rating service and ceased to provide relevant information to the agency from Oct. 12.
A Citigroup (NYSE:C) report on Tuesday said the company’s management planned to dispose of 50 billion to 80 billion yuan’s ($6.8-$11 billion) worth of non-core assets within the next 12 months, including its non-controlling stakes in Alibaba-backed logistics platform Cainiao, resources and metals firm Jianlong and property assets.
Fosun’s management also plans to gradually repay the outstanding senior notes and increase borrowings from banks, the report said.
Bloomberg reported on Tuesday that Fosun was reviewing options for its European financial holdings.
The company didn’t immediately respond to a query about its asset disposal plans.
($1 = 7.3089 Chinese yuan renminbi)
