MNI China Daily Summary: Thursday, March 13

MNI BRIEF: China Has Been In Communication With U.S. On Trade

MNI BRIEF: China To Enhance Customs Clearance

MNI INTERVIEW2: Policy Lag Justifies Faster CNB Easing - Holub

MNI BRIEF: China Consumer Satisfaction Up

MNI: PBOC Net Drains CNY68.6 Bln via OMO Thursday

EZ/UK Bond Supply Calendar: SlovGB Auction Monday

US EIA:NAT GAS STORAGE -62 BCF TO 1,698 BCF MAR 07 WK

MNI: US FEB FINAL DEMAND PPI +0.0%, EX FOOD, ENERGY -0.1%

GERMANY: Union/SPD Migration Alignment After Turmoil Threatened Debt Deal (BILD)

GERMANY: Official Interim Election Results Tilt Towards Missing BSW & FDP

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CREDIT RATING: ZFF (Ba1*-/BB+/NR): Moody’s Review for Downgrade

CREDIT RATING
  • Moody’s put ZFF on review for downgrade late Friday. It follows an outlook negative from S&P in August. It expects the potential downgrade to be limited to one notch.
  • The move follows a second profit warning from the parts maker in September, pressuring margin and FCF metrics.
  • It now expects EBITA margins towards 3% this year, with a ratings floor at 5% which it believes will be challenging to achieve in 2025.
  • It sees leverage at 4x at FY25 following repayment of maturing bonds, already refinanced. 3.5x is the floor for the rating.
  • RCF/ND below mid-teens or FCF below -€500mn are the relevant cash flow thresholds. Moody’s expects -€1bn FCF this year before returning to positive in 2025.
  • ZFF has been looking at an IPO of Lifetec and recently completed an internal carve-out. The EV was reported at €3-4bn back in April, but the valuation has clearly been impaired since. Nonetheless this is an important potential deleveraging event. It doesn’t resolve the margin problem, however.
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