Shandong Ruyi Bonds Tumble After S&P Withdraws Rating

BEIJING, China — Dollar bonds of Chinese luxury clothing company Shandong Ruyi Technology Group Co. plunged to record lows on Friday after S&P Global Ratings withdrew its credit rating on the firm.

Ruyi’s dollar bond due December 19 fell 15 cents on the dollar while the note due 2022 fell 10 cents at 5:07 pm in Hong Kong, according to Bloomberg-compiled prices. Both bonds dropped to all-time lows, the data show.

S&P on Friday said it had withdrawn its CCC+ credit rating on Ruyi at the company’s request. Its rating outlook on the company was negative at the time of the withdrawal, S&P said.

“Ruyi should be able to meet its bullet debt maturities in December 2019 with the recent backing of Jining City Urban Construction Investment Co. Ltd., a state-owned enterprise,” S&P said, adding that some execution risks could be expected given the short time frame.

China’s local government-owned Jining City Urban Construction Investment Co. bought a 26 percent stake in Shandong Ruyi in October for 3.5 billion yuan ($497 million). Jining City Construction is now Shandong Ruyi’s second-biggest stakeholder, according to an October filing on the Shanghai Clearing House.

While Ruyi juggles its own debt burden, it’s also facing a negative impact from defaults in other Shandong-based companies, according to Li Yunfei, an analyst at Pacific Securities Co.

Ruyi made $4 billion worth of overseas acquisitions in three years starting from 2015, including UK trench coat maker Aquascutum and SMCP SA, the French fashion retailer whose labels include Sandro, Maje and Claudie Pierlot. It also owns Hong Kong-listed Trinity Ltd., which controls British bespoke tailor Gieves & Hawkes.

Its stated ambition was to become the LVMH of China and the company planned to inject new, trendy elements into underperforming brands and boost their e-commerce sales, Chairman Qiu Yafu said in an interview last year.

By Rebecca Choong Wilkins and Jing Zhao; editors: Neha D'silva and Chan Tien Hin.