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Henan Yinge’s Bond Yield Jumps Most This Year After Downgrade

The yield on Henan Yinge Industrial Investment Holding Co. (600069)’s 750 million yuan ($119 million) of bonds rose 54 basis points yesterday in its biggest rise this year to a two-month high of 8.42 percent following a ratings downgrade, exchange-traded prices on Bloomberg show.

Pengyuan Credit Rating Co. lowered its long-term rating on the paper maker, which is based in Luohe in the central province of Henan, to A+ from AA- and on its bond to AA- from AA with a stable outlook, according to a Shanghai Stock Exchange filing on May 3.

The debt of the manufacturer will continue to increase and its cash-flow situation is worsening, Pengyuan Credit said in the statement. “The pressure of short and long-term debt is quite big,” the ratings company said.

There’s excess capacity in the paper industry, and pulp waste paper and other raw material prices have risen rapidly, according to Pengyuan. Henan Yinge’s profitability has fallen and its losses have increased, Pengyuan said in the filing, which was posted by the manufacturer.

The yield on Henan Yinge’s 2017 bonds dropped 19 basis points today to 8.24 percent, exchange-traded prices on Bloomberg show.

To contact Bloomberg News staff for this story: Henry Sanderson in Beijing at hsanderson@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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