Zhuhai Huafa Group Co., one of China’s biggest local-government owned conglomerates, was placed on rating watch negative by Fitch Ratings over heightened refinancing risks, a step that signals increased possibility of a downgrade.
Fitch cited the company’s “weakening debt-service coverage, approaching near-term debt maturities and widening issuer bond spreads amidst unconfirmed market rumors of potential debt-maturity extensions,” in a statement on Friday. Fitch’s current score on Huafa is BBB, toward the lower end of investment grade.