Bond Market News

Chinese leading car services provider eHi Car Services was upgraded to B from B- by Fitch. The rating agency expects eHi’s cash generation and leverage to improve following the normalization in operations post-pandemic. Domestic travel recovery after the pandemic has seen it register a 25% YoY revenue jump in Q1 and EBITDA margins moving higher to 14%. This growth in business is also set to ease refinancing risks. However, Fitch notes that its broad high leverage can impede the pace of recovery. EBITDA net leverage was “exceptionally high” at 7.8x in 2022 and is expected to moderate to below 5x in 2023. Thus, while it expects eHi’s liquidity to stabilize, it warns that a “meaningful deleveraging is unlikely”. eHi’s has a dollar bond due November 2024. While Fitch believes that the company’s financial position will improve, they would need to reassess refinancing options closer to the maturity date.

eHi’s USD 7.75% 2024s were trading 0.6 points higher at 76.9 cents on the dollar.