Fosun International sells assets amid credit rating cuts and liquidity concerns
- Recent exchange filings show several stake sales that have helped raise about US$100 million in cash
- Moody’s and S&P have downgraded Fosun’s creditworthiness this quarter amid looming debt maturity and liquidity challenges
It also sold 26.1 million shares in New China Life Insurance for about 400 million yuan on September 15, trimming its ownership to 4.8 per cent and below the 5 per cent substantial shareholder threshold for the first time since 2016, a separate filing showed.
The sales, while small relative to the size of the group, followed recent reductions in its holdings in its flagship pharmaceutical and tourism units. They might do little to temper speculation about its finances. Fosun International last week denied a Bloomberg News report that Chinese regulators were asking banks to monitor its debt burden.
Fosun International had 117.7 billion yuan in cash or cash equivalents on June 30, according to its latest accounts. Its total liabilities amounted to 651 billion yuan, of which 40 per cent were interest-bearing borrowings. It had 28 billion yuan worth of bonds and 33 billion yuan of bank loans maturing between July this year and June 2023, according to S&P.
“[The company] faces narrowing liquidity headroom and a shortening debt maturity profile amid hurdles to access both onshore and offshore bond markets and macroeconomic uncertainty,” S&P said on September 16. Fosun has the ability to monetise its large and diversified portfolio, “but adverse capital market sentiment could erode asset valuation,” it added.
Moody’s said Fosun faces elevated refinancing pressure, on top of potential contagion risk from weak subsidiaries exposed to the Chinese property market.