Fitch Downgrades Honghua to 'CCC'
The downgrade reflects substantial weakness in operations and financials in a sharp industry downturn. The company failed to unlock cash from working capital to reduce debt as revenue dropped dramatically. Operational scale has shrunk rapidly due to muted demand, and is not likely to recover under current market conditions. Liquidity is not an immediate issue, but the company has on offshore bond due in 2019 which may be difficult to refinance without significant recovery in the oil and gas exploration industry.