UPDATE: S&P downgrades China Jinjiang Environment issuer rating

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This article was originally published on Thursday, 14 March 2019 at 14:16 SGT; it has since been updated.

S&P Global Ratings said on Wednesday it downgraded China Jinjiang Environment’s issuer rating to BB-minus from BB, with a negative outlook, as higher-than-expected capital expenditure “materially increased” outstanding debt and interest expense.

China Jinjiang Environment’s outstanding reported debt has risen by around 32 percent on-year to 6.7 billion yuan by end-2018, while interest paid increased by around 61 percent to 390 million yuan on-year, the ratings agency said in a statement.

In addition, “technological upgrade of the CJE’s eight existing WTE facilities has temporarily lowered the overall utilization and thereby weakened its operating cash flow generation ability,” S&P said. WTE stands for waste-to-energy.

Electricity sales revenue, a material contributor to overall revenue, fell 12.7 percent on-year in 2018, S&P said.

China Jinjiang Environment said in a filing to SGX on Thursday that it noted S&P’s concerns.

“The company monitors its pace of expansion and its cash position closely, and will remain financially disciplined in this regard,” China Jinjiang Environment said in a filing to SGX on Thursday.

S&P’s move followed Moody’s Investors Services’ decision earlier this month to downgrade the company’s corporate family rating to Ba3 from Ba2, and to cut the senior unsecured rating on its U.S. dollar bond to B1 from Ba3.

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