Research Update: Shandong Gold Group 'BBB-' Rating Affirmed With Stable Outlook; SACP Revised Down To 'bb-'

In our view, Shandong Gold Group Co. Ltd. (SDG) will maintain its leading position in China's gold mining industry and continue to have a high likelihood of receiving extraordinary government support, if needed. We revised down SDG's stand-alone credit profile (SACP) to 'bb-' from 'bb' to reflect the company's higher leverage in the next 12-24 months. This is due to production halt amid mine safety inspection this year and sustained high capital expenditure (capex). We affirmed our 'BBB-' long-term issuer credit rating on the China-based gold producer and the 'BBB-' long-term issue rating on the U.S. dollar-denominated senior unsecured notes that the company guarantees. The stable outlook reflects our view that SDG will maintain its leading market position in China.

...- In our view, Shandong Gold Group Co. Ltd. (SDG) will maintain its leading position in China's gold mining industry and continue to have a high likelihood of receiving extraordinary government support, if needed. - We revised down SDG's stand-alone credit profile (SACP) to '##-' from '##' to reflect the company's higher leverage in the next 12-24 months. This is due to production halt amid mine safety inspection this year and sustained high capital expenditure (capex). - We affirmed our '###-' long-term issuer credit rating on the China-based gold producer and the '###-' long-term issue rating on the U.S. dollar-denominated senior unsecured notes that the company guarantees. - The stable outlook reflects our view that SDG will maintain its leading market position in China. SDG's credit metrics will likely breach our downside trigger temporarily amid the production halt this year and we expect its operations to gradually recover and generate healthy operating cash flow from 2022. Its leverage...

Research Update