HONG KONG, January 26 (Fitch) Fitch Ratings has downgraded China Medical Technologies’ (CMED) ‘B+’ Issuer Default Rating to ‘RD’.
Fitch has learned that no payment has been received on the scheduled coupon, due 15 December 2011, on CMED’s USD125m 6.25% convertible senior notes, due 2016. Fitch understands that the cure period for the coupon ended on 14 January 2012. The cure period refers to a provision in a contract allowing a defaulting party to fix the cause of a default.
As a result, the non-payment is consistent with Fitch’s analysis of a ‘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. Fitch does not typically assign ratings to convertible bonds, but, subject to their individual terms, they are generally treated as debt instruments prior to conversion for the purposes of its financial analysis.
On 13 December 2011, CMED announced a “debt restructuring plan to improve its balance sheet”. Fitch had previously treated the announcement as an opportunistic move to take advantage of the low market prices of its public debt. According to the company, it had USD206m of cash as at 30 September 2011.