UPDATE 1-Fitch downgrades Huarong Industrial citing weak link with parent
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SHANGHAI, Aug 11 (Reuters) – Fitch Ratings said on Wednesday it has downgraded Huarong Industrial Investment & Management Co, citing weak ties with its troubled, and state-controlled parent.
Huarong Industrial is a unit of bad loan company Huarong Asset Management.
Fitch said it had cut its long-term foreign-currency Issuer Default Rating to “CCC” from “BB”.
It lowered its assessment of Huarong Industrial’s links with its troubled parent to “weak” from “strong” and noted there is “no certainty that any government support to China Huarong will flow through” to the company.
The rating agency also cited a lack of a refinancing plan for Huarong Industrial’s debts maturing in 2022.
Huarong, which counts China’s finance ministry as its biggest shareholder, missed a March 31 deadline for filing its 2020 earnings, sparking a rout in its bonds amid growing concern over its financial health.
Last week, Huarong announced plans to sell a 70% stake in a consumer finance unit, and revamp its trust subsidiary, as part of a restructuring effort.
“Fitch believes there is growing uncertainty over the parent’s intention to support Huarong Industrial’s liquidity needs in the future,” Fitch said.
“We have been unable to confirm that Huarong Industrial remains a core subsidiary of China Huarong as China Huarong embarks on an asset disposal plan.”
In addition, Huarong Industrial has no refinancing plan yet for its capital market debts, which exceeded 6 billion yuan ($925 million) at the end of June, Fitch said.
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