Research Update: China Hongqiao 'BB-' Rating Affirmed With Stable Outlook; Management And Governance Improved, But Liquidity Has Weakened

China Hongqiao Group Ltd.'s profitability and leverage will continue to recover from their 2022 lows during the next one to two years, owing to supportive industry conditions. We have revised Hongqiao's management and governance (M&G) assessment to neutral from negative, given the company's improved corporate governance and information transparency in the past several years. There have been no major M&G deficiencies at the China-based aluminum producer since 2017. That said, a high proportion of short-term debt has weighed on Hongqiao's liquidity. We expect the company's capital structure to improve over the next two years as it increases the proportion of long-term financing. On April 23, 2024, S&P Global Ratings affirmed its 'BB-' long-term issuer credit rating on Hongqiao and the

...- China Hongqiao Group Ltd.'s profitability and leverage will continue to recover from their 2022 lows during the next one to two years, owing to supportive industry conditions. - We have revised Hongqiao's management and governance (M&G) assessment to neutral from negative, given the company's improved corporate governance and information transparency in the past several years. There have been no major M&G deficiencies at the China-based aluminum producer since 2017. - That said, a high proportion of short-term debt has weighed on Hongqiao's liquidity. We expect the company's capital structure to improve over the next two years as it increases the proportion of long-term financing. - On April 23, 2024, S&P Global Ratings affirmed its '##-' long-term issuer credit rating on Hongqiao and the 'B+' long-term issue rating on the U.S. dollar-denominated senior unsecured notes that the company issued. - The stable outlook reflects our view that Hongqiao's ratio of funds from operations (FFO)...

Research Update