Research Update: Xinjiang Guanghui Industry Investment (Group) Co. Ltd. 'B' Rating Affirmed With Stable Outlook; Off Watch Developing

We expect Guanghui's leverage to improve over the next 12 months as a result of debt repayment and EBITDA growth supported by a recovery in the energy business. Still, we see the company's heavy reliance on short-term debt as a risk to its ability to manage its upcoming debt maturity and liquidity. On Feb. 1, 2019, S&P Global Ratings affirmed its 'B' long-term issuer credit rating on Guanghui. We also affirmed our 'B-' long-term issue rating on the China-based auto distributor's U.S. dollar-denominated senior unsecured notes. At the same time, we removed all the ratings from CreditWatch, where they were placed with developing implications on Sept. 28, 2018. The stable outlook for the next 12 months reflects our expectation that

...+ We expect Guanghui's leverage to improve over the next 12 months as a result of debt repayment and EBITDA growth supported by a recovery in the energy business. + Still, we see the company's heavy reliance on short-term debt as a risk to its ability to manage its upcoming debt maturity and liquidity. + On Feb. 1, 2019, S&P Global Ratings affirmed its 'B' long-term issuer credit rating on Guanghui. We also affirmed our 'B-' long-term issue rating on the China-based auto distributor's U.S. dollar-denominated senior unsecured notes. At the same time, we removed all the ratings from CreditWatch, where they were placed with developing implications on Sept. 28, 2018. + The stable outlook for the next 12 months reflects our expectation that Guanghui will maintain its competitive position, providing some buffers against its dependence on short-term debt and high debt leverage....

Research Update