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Moody's downgrades Tianqi Lithium over strained capital structure

Moody's downgraded Tianqi Lithium Corp.'s corporate family rating to Caa1 from B2, with a negative outlook, reflecting the company's "very strained capital structure" due to its high debt burden, elevated leverage and weak liquidity.

These factors heightened the company's refinancing risk, which is further worsened by the global coronavirus outbreak, falling oil prices and the deteriorating global economic outlook, the rating agency said.

Moody's expects Tianqi Lithium's total debt to EBITDA to hover around 8.8x over the next 12 months, while unstable lithium chemical prices and a slower-than-expected ramp-up of production in Australia could threaten cash flow generation and push back deleveraging.

Moreover, the company has failed to improve its capital structure, and its liquidity remains inadequate with its limited cash reserves unable to cover its debt, Moody's said.