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(Bloomberg) – Investors are involved in the Liaoning-based company’s ability to juggle their debt as the pandemic affects profits.
What’s going on:
The monetary fitness of Brilliance Auto, the parent company of Brilliance China Automotive Holdings Ltd., which is listed in Hong Kong, is of growing concern as it manufactures automobiles with the German automaker in China as a joint venture.
Speculation has increased that the organization will struggle to meet its commitments after its banks establish a creditor committee to coordinate debt claims. The organization will pay 1.37 billion yuan ($200 million) in local bonds in circulation this year, according to knowledge compiled through Bloomberg.
Brilliance Auto, also known as Huachen Automotive Group, saw one of its bonds fall on land by 35% in the interbank market on Thursday to an all-time high amid doubts about his ability to pay. That percentage value of Brilliance China Automotive will fall on the same day.
Because it’s this important thing:
The monetary fitness of the world’s largest automotive market operators is largely monitored by domestic and international investors, as leveraged corporations struggle with pandemic tension and declining domestic consumption.
After several notable government-linked borrowers, there is also a growing interest in the government’s point of intervention faced by these corporations and the benefits to foreign corporations associated with them.
Brilliance Auto has already agreed to sell some of its shares in the Hong Kong-listed subsidiary to some other Liaoning state-owned company. With the option of extra engagement sales on the horizon, the long-term ownership of this leading unit remains uncertain. In addition, the unit is also expected to give up its joint venture with BMW until 2022, a very important source of profit for the group.
What the company is:
The history of Brilliance Auto dates back to 1949, when the People’s Republic of China was founded. It is one of the largest state-owned enterprises in the northeastern province, employing 47,000 people. It has 4 publicly traded corporations in Hong Kong and Shanghai, and about 160 all-or-part-owned sets, according to their official website data.
Brilliance Auto made a net profit of 11 billion yuan in 2019, 12% more than last year, largely thanks to contributions from the joint venture with BMW, according to its most recent annual report.
What the company says:
The automaker said it had refunded all bonuses that expire without any non-compliance, according to a statement released Tuesday night. He added that his operations remained general and that he would continue to honor his debts.
Brilliance Auto’s disclosure calls received no response.
What the score says:
Brilliance Auto has a low profitability and relies heavily on its joint venture with BMW, according to a June report by Golden Credit Rating International Co.In addition, the joint venture’s sales are expected to fall this year with a call for a pandemic, he said. Chinese. rating signature.
So what are investors on?
Investors are now focusing more on Brilliance Auto’s ability to meet debt repayment over the next two years, and the maximum of their long-term debt will be affected by falling prices.
Market participants also keep a close eye on the automaker’s keeping their word that it will have no problem paying its obligations overdue before March, as reported through local Chinese media.
Nothing else?
Shares fall on BMW’s Chinese allocation due to considerations of parental debts
Chinese carmaker Yuan bonds sink amid corporate health considerations
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