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Moody's raises outlook on Fosun International on asset disposals

Moody's raised its outlook on Fosun International Ltd.'s Ba3 corporate family rating to positive from stable following the company's sale of assets.

Moody's also affirmed the company's Ba3 corporate family rating.

The rating agency said Dec. 15 that the change in outlook takes into account Fosun International's plan to dispose of a 50% stake in its Shanghai bund financial center projects, as well as its plan to sell its 100% stake in Ironshore Inc.

Moody's said that the success of the two major asset disposals can generate 26 billion yuan in cash proceeds. It will also help improve the company's liquidity profile and lower its leverage.

The rating reflects the Chinese company's diversified business profile and multiple funding channels it has available to support its investments. However, the rating is curbed by Fosun International's evolving investment strategy, rapid expansion into new businesses through acquisitions, increasing execution risks, and debt-funded expansion.

Moody's said that the ratings could be upgraded if the company's financial profile and liquidity position further improves, as well as if it demonstrates stronger investment discipline and prudent financial management.

Conversely, the ratings can be downgraded if Fosun International continues its debt-funded growth and if it fails to raise enough equity capital or speed up its asset disposals to fund its acquisitions.

As of Dec. 15, US$1 was equivalent to 6.94 Chinese yuan.