Hong Kong, February 02, 2021 -- Moody's Investors Service has downgraded the corporate family rating (CFR)
of GCL New Energy Holdings Limited to Caa3 from Caa2.
The outlook was changed to negative from rating under review.
This rating action concludes the ratings review initiated on 24 December
2020, and follows GCL New Energy's announcement that it has
defaulted on its USD500 million note and has offered a second extension
to the noteholders for participation in its proposed debt restructuring
plan [1].
Subsequently, Moody's will withdraw the rating of GCL New
Energy because of the company's default on its USD bond.
Please refer to the Moody's Investors Service Policy for Withdrawal of
Credit Ratings, available on its website, www.moodys.com.
RATINGS RATIONALE
"The downgrade reflects the imminent liquidity risk from the possible
acceleration of its debt repayments after GCL New Energy failed to repay
its USD bond that matured on 30 January 2021," says Ivy Poon,
a Moody's Vice President and Senior Analyst.
"Uncertainty also remains around the proposed debt restructuring
plan as the company has not yet fulfilled the requirement for the Bermuda
Scheme," adds Poon.
On 1 February, GCL New Energy announced the termination of the exchange
offer for its exiting $500 million 7.1% USD note
issued in 2018 and its default on the USD note.
The company also extended its invitation to existing noteholders to the
proposed debt restructuring to 8 February 2021, as the acceptance
from the note holders only reached 53% of the total principal of
the USD bond as of 1 February, lower than the 75% threshold
required to obtain a court order to proceed with the proposed debt restructuring
under the Bermuda Scheme.
The missed repayment of the USD bond could trigger the acceleration of
GCL New Energy's other debt under cross-default provisions.
If this risk crystallizes, it will create imminent liquidity pressure
for the company. Such risk will continue to hinder the company's
credit profile until the existing note is refinanced through a debt restructuring.
As of 1 February, the company had not yet received any demand for
immediate repayment from other creditors.
The negative outlook reflects the heightened liquidity risk and the uncertainty
to GCL New Energy's credit profile arising from uncertainties concerning
the proposed debt restructuring, the timetable and the final structure.
The rating action also considers governance risks in terms of GCL New
Energy's aggressive financial policy to expand and invest in solar
projects in China, resulting in a heavy debt burden and tight liquidity
for the company.
The principal methodology used in this rating was Unregulated Utilities
and Unregulated Power Companies published in May 2017 and available at
https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1066389.
Alternatively, please see the Rating Methodologies page on www.moodys.com
for a copy of this methodology.
Listed on Hong Kong Stock Exchange, GCL New Energy Holdings Limited
is a solar power generation company in China. The company's installed
capacity totaled 7.0GW as of 30 June 2020.
REGULATORY DISCLOSURES
For further specification of Moody's key rating assumptions and
sensitivity analysis, see the sections Methodology Assumptions and
Sensitivity to Assumptions in the disclosure form. Moody's
Rating Symbols and Definitions can be found at: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_79004.
For ratings issued on a program, series, category/class of
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in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security or pursuant
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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
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and whose ratings may change as a result of this credit rating action,
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Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
The rating has been disclosed to the rated entity or its designated agent(s)
and issued with no amendment resulting from that disclosure.
This rating is unsolicited.
a.With Rated Entity or Related Third Party Participation:
NO
b.With Access to Internal Documents: NO
c.With Access to Management: NO
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Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Moody's general principles for assessing environmental, social
and governance (ESG) risks in our credit analysis can be found at https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1243406.
At least one ESG consideration was material to the credit rating action(s)
announced and described above.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the EU and is endorsed
by Moody's Deutschland GmbH, An der Welle 5, Frankfurt
am Main 60322, Germany, in accordance with Art.4 paragraph
3 of the Regulation (EC) No 1060/2009 on Credit Rating Agencies.
Further information on the EU endorsement status and on the Moody's
office that issued the credit rating is available on www.moodys.com.
The Global Scale Credit Rating on this Credit Rating Announcement was
issued by one of Moody's affiliates outside the UK and is endorsed
by Moody's Investors Service Limited, One Canada Square,
Canary Wharf, London E14 5FA under the law applicable to credit
rating agencies in the UK. Further information on the UK endorsement
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available on www.moodys.com.
REFERENCES/CITATIONS
[1] Company filing at Hong Kong Stock Exchange; 01-Feb-2021
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.
Ivy Poon
Vice President - Senior Analyst
Project & Infrastructure Finance
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
Terry Fanous
MD-Public Proj & Infstr Fin
Project & Infrastructure Finance
JOURNALISTS: 61 2 9270 8141
Client Service: 852 3551 3077
Yian Ning Loh
Associate Managing Director
Project & Infrastructure Finance
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
