OREANDA-NEWS. Fitch Ratings has downgraded China Fishery Group Limited's (China Fishery) Issuer Default Rating (IDR) to 'RD' from 'C'. No Outlook has been assigned. The company has not paid the scheduled coupon, due 30 January 2016, on its USD300m senior notes even after the end of the 30-day grace period on 29 February 2016.

The non-payment is consistent with an 'RD' rating - signifying the uncured expiry of any applicable grace period, cure period or default forbearance period following a payment default on a material financial obligation.

Meanwhile, China Fishery's senior unsecured rating and the rating on the USD300m senior unsecured notes issued by CFG Investment S.A.C., China Fishery's financing vehicle, have been affirmed at 'C', with a Recovery Rating of 'RR4'.

KEY RATING DRIVERS
Access to Financing Hampered: In November 2015, HSBC filed a winding-up petition against China Fishery, which was subsequently dismissed by the courts. The petition severely curtailed the company's access to funding and thus the company is facing a cash crunch. China Fishery is now in discussions with banks and other creditors to obtain financing, which would allow the company to resume normal operations.

Discussion with Noteholders Started: According to China Fishery, noteholders representing over 40% of the outstanding amount of its USD300m senior notes have formed an ad-hoc committee. China Fishery is now in discussion with this committee regarding a potential debt restructuring.

Peruvian Sale Critical: China Fishery announced in December 2015 that it had received non-binding memorandums of understanding from two prospective buyers for its Peruvian business at an indicative enterprise value of USD1.7bn. Fitch believes that in the event of a successful sale at the suggested valuation, the proceeds should be more than sufficient to cover all of the company's outstanding debt.

RATING SENSITIVITIES
Negative: Future developments that may, individually or collectively, lead to negative rating actions include:
- The IDR will be changed to 'D' from 'RD' if China Fishery enters the bankruptcy process.

Positive: Future developments that may, individually or collectively, lead to positive rating actions include:
- Successful debt restructuring.
- Successful sale of the Peruvian business.