Hopson credit rating downgraded to ’CCC’ at S&P due to nonpayment risk

Investing.com -- S&P Global Ratings has downgraded Hopson Development Holdings Ltd. to ’ CCC (WA:CCCP)’ from ’B’ due to increasing nonpayment risk, as announced on April 1, 2025. The ratings were later withdrawn at Hopson’s request.

In its most recent financial results, Hopson disclosed that it had triggered cross-default clauses on certain borrowings due to failure to pay debts at the subsidiary level. This indicates that Hopson could be facing a near-term liquidity crisis, as it may have to accelerate repayment of the cross-defaulted debt in an already weak liquidity environment.

This downgrade comes after the company’s full year 2024 results, announced on March 28, 2025, which revealed that Hopson had triggered cross-default clauses on loans amounting to HK$9.3 billion following nonpayment of specific loans valued at HK$942 million.

As of the end of 2024, Hopson had about HK$8.5 billion in reported cash and cash equivalents. However, the company has limited cash on hand compared to its short-term maturities. S&P Global Ratings assesses Hopson’s liquidity as weak, estimating its ratio of liquidity sources to uses will be 0.59x for the 12 months ending Dec. 31, 2025. At the end of 2024, Hopson had about HK$25 billion in short-term debt, including margin loans. Its ratio of cash to short-term debt was 0.34x.

S&P Global Ratings also identified material deficiencies in Hopson’s risk management, which further weakens its creditworthiness. The company’s management and governance were assessed as negative due to its failure to manage credit risk amid a property market downturn.

Before the ratings were withdrawn, the negative outlook reflected S&P Global Ratings’ view that Hopson could default or engage in distressed restructuring over the next 12 months, barring an unforeseen positive development.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.