Hong Kong, January 22, 2018 -- Moody's Investors Service, ("Moody's") has
assigned a Ba2 senior unsecured rating to the USD notes to be issued by
Fortune Star (BVI) Limited and guaranteed by Fosun International Limited
(Fosun, Ba2 stable).
The rating outlook is stable.
The purpose of the proposed bonds is to refinance Fosun's existing
indebtedness and for working capital and general corporate purposes.
The bond rating also reflects Moody's expectation that Fosun will complete
the bond issuance on satisfactory terms and conditions, including
proper registrations with China's (A1 stable) National Development
and Reform Commission.
RATINGS RATIONALE
"The bond issuance will not materially increase Fosun's leverage levels,
because the company will primarily use the proceeds to refinance its existing
debt at the holding company level," says Lina Choi, a Moody's
Vice President and Senior Credit Officer, and also Moody's
International Lead Analyst for Fosun.
Fosun's Ba2 corporate family rating reflects its: (1) large and
diversified investment portfolio, (2) proven investment track record,
and (3) management's commitment to improve the company's financial profile.
However, the rating is constrained by Fosun's: (1) moderate
credit contagion risk from investees, (2) complicated organizational
structure, and (3) weak interest coverage at the holding company
level.
The Ba2 rating on the proposed bonds reflects Moody's view that
Fosun's corporate family rating is unaffected by structural subordination
to claims at the operating company level.
Despite its status as a holding company with a majority of the group's
claims at the operating subsidiary level, the group's diversified
business profile — with cash flow generation across a large number
of operating subsidiaries and investees in its investment portfolio with
a global presence — mitigates structural subordination risks.
The stable ratings outlook reflects Moody's expectation that Fosun will:
(1) pursue its stated business strategies, (2) refrain from aggressive
debt-funded acquisitions, and (3) actively manage its investments
and asset disposals and access to capital to keep refinancing risk under
control.
Upward ratings pressure could emerge if Fosun improves: (1) its
business profile with more stable quality core businesses, (2) dividends
and interest income/interest and operating expenses coverage to above
1.5x at the holding company level, and (3) its liquidity
position.
On the other hand, downward ratings pressure could arise if:
(1) the company's financial profile deteriorates significantly as a result
of large debt-funded investments, (2) the quality of its
investment portfolio deteriorates and/or contagion risk from its investees
rises, or (3) the company shows an increased reliance on short-term
funding, resulting in higher refinancing risk.
The principal methodology used in these ratings was Investment Holding
Companies and Conglomerates published in December 2015. Please
see the Rating Methodologies page on www.moodys.com for
a copy of this methodology.
Fosun Group was founded in 1992. Fosun International Limited (Fosun),
the holding company of Fosun Group, is headquartered in Shanghai
and listed on the Hong Kong Stock Exchange in 2007.
As an investment holding company, Fosun's principal businesses are
in integrated finance (wealth) and industrial operations. The estimated
market value of Fosun's investment portfolio totaled around RMB200 billion
as of year-end 2016. The consolidated group's revenue totaled
RMB74 billion in 2016.
At 31 December 2016, Fosun was 71.55% beneficially-owned
by its chairman and co-founder, Mr.Guangchang Guo
and the company's two other co-founders.
The Local Market analyst for this rating is Kai Hu, +86 (21)
2057-4012
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the credit rating action on the support provider and in relation to
each particular credit rating action for securities that derive their
credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and
in relation to a definitive rating that may be assigned subsequent to
the final issuance of the debt, in each case where the transaction
structure and terms have not changed prior to the assignment of the definitive
rating in a manner that would have affected the rating. For further
information please see the ratings tab on the issuer/entity page for the
respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
The first name below is the lead rating analyst for this Credit Rating
and the last name below is the person primarily responsible for approving
this Credit Rating.
Lina Choi
VP - Senior Credit Officer
Corporate Finance Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Gary Lau
MD - Corporate Finance
Corporate Finance Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077