CITIC Resources Holdings Ltd. Liquidity Score Revised To #BB-# Rating Affirmed

Stocks and Financial Services Press Releases Wednesday May 30, 2018 17:00
HONG KONG--30 May--S&P Global Ratings
HONG KONG (S&P Global Ratings) May 30, 2018--S&P Global Ratings today affirmed its 'BB-' long-term issuer credit rating on Hong Kong-based CITIC Resources Holdings Ltd. The outlook is stable.
We revised our assessment of CITIC Resources' liquidity to adequate from less than adequate following the company's successful refinancing US$530 million in bank loans in 2017.

We affirmed the issuer credit rating on CITIC Resources because we expect CITIC Resources' leverage to remain high even after factoring in our latest oil price assumptions. We also expect the company to maintain its relatively small scale.

CITIC Resources secured a US$500 million five-year term loan provided by a subsidiary of CITIC Ltd. in June 2017 to refinance a US$490 million term loan due in 2018. The company also secured another US$40 million three-year term loan in May 2017 to repay the final instalment of a US$40 million term loan in the same month.

After the refinancing, we expect the ratio of liquidity sources to liquidity uses to be materially above 1.2x for the next 12 months. CITIC Resources has limited debt maturing by 2018.

The stable outlook on CITIC Resources Holdings Ltd. over the next 12 months reflects our expectation that the company will continue to receive strong support from its parent, CITIC Group Corp. We do not expect any material improvement in CITIC Resources' operations even after factoring in a recovery in oil prices in 2018. We expect CITIC Resources to remain highly leveraged over the next 12 months.

We could lower the rating on CITIC Resources if the company's parental support is weaker than we currently expect.

We could raise the rating if the oil industry recovers meaningfully or if CITIC Resources controls its leverage and ramps up crude oil production, such that its debt-to-EBITDA ratio improves to approaching 5x on a sustainable basis.


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