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LDK Solar Has Credit Rating Downgraded on Losses, Export Outlook

September 03, 2012

LDK Solar Co.’s (LDK:US) credit rating was cut one level to A by Shanghai Brilliance Credit Rating & Investors Service Co., its second downgrade since June, on the solar-wafer maker’s operating losses and souring export outlook.

Shanghai Brilliance lowered the credit grade of Jiangxi LDK Solar Hi-Tech Co., the manufacturer’s principal operating subsidiary, to its sixth-highest level and kept the rating on negative outlook after production and sales fell in 2012, the risk assessor said in a statement on Chinabond, the nation’s bond clearinghouse. Chinese solar makers may struggle to export their products due to a U.S. tariff on Chinese solar cells announced May 17 and the threat of further restrictions in Europe, according to the statement.

“Domestic solar producers still heavily rely on Europe and America and other foreign consumer markets,” Shanghai Brilliance said. “The domestic solar equipment producer industry’s operating environment will get worse.”

LDK Solar, which is based in the southeast province of Jiangxi and is the world’s second-biggest maker of wafers that convert sunlight to power, reported (LDK:US) a first-quarter net loss of $185.2 million compared with profit of $135.4 million a year earlier, it said June 26. Solarworld AG, Germany’s largest solar-panel maker, led a group of manufacturers in requesting in July that the European Commission investigate whether Chinese competitors dumped products at below-market rates on regional markets.

Shanghai Brilliance also cut its rating on LDK Solar’s 500 million yuan ($79 million) of notes due December 2014 to A from A+, it said. The yield on the bonds has risen 281 basis points since the beginning of July to a record 8.38 percent, according to Chinabond prices on Bloomberg.

Shanghai Brilliance’s latest downgrade comes after it cut LDK Solar’s rating by two levels on June 29, according to a statement at the time.

To contact Bloomberg News staff for this story: Henry Sanderson in Beijing at

To contact the editor responsible for this story: Shelley Smith at

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