Hesteel affirms AAA credit rating despite steel sector headwinds

Hesteel Co., Ltd. (SZSE: 000709) has reaffirmed its AAA credit rating with a stable outlook, according to a report by China Chengxin International Credit Rating Co., Ltd. (CCXI) dated June 17, 2024. The rating agency cited Hesteel's strong indirect parent company, dominant scale and location, diversified product mix, and robust funding access as key strengths. CCXI acknowledges challenges in the steel sector, including costs, lower earnings in 2023, project investment, and high debt load. However, CCXI notes Hesteel benefits from large shareholder support and premium domestic production. It also faces pressure from coal, prices, and high financial leverage. This report was followed by a preliminary bond offering for up to 1.5 billion yuan of bonds that rated AAA. The rating applies to the proposed bonds and the company itself. However, these announcements do not constitute to the company's financial success.