S&P puts LDK Solar on "negative" watch

(SeeNews) – Aug 25, 2011 – S&P on Wednesday placed on downgrade review its B+ corporate credit rating and cnBB Greater China credit scale rating on Chinese solar wafers maker LDK Solar Co Ltd (NYSE:LDK).

The "negative" listing, meaning the ratings would be wither lowered or affirmed at the end of a review, follows the downward revision in the company's financial projections for the second quarter of 2011 and for the entire year.

The agency believes the lower financial guidance stems from the fall in the market prices and worse-than-projected demand since the second quarter.

LDK cuts its revenue guidance to USD 2.5 billion-2.7 billion (EUR 1.7bn-1.9bn) from its previous estimate of USD 3.5 billion-3.7 billion for full-year 2011. The gross margin was revised to 15%-20%, from 24%-29% previously. According to the rating agency's forecasts, the new financial guidance would bring full-year 2011 debt-to-EBITDA ratio above 5x and debt-to-capital ratio above 60%.

"In our view, LDK's leverage may rise and remain high in 2011 if the company's profitability is weaker than our expectation and if the company's debt does not decline over the next two quarters," said Standard & Poor's credit analyst Jerry Fang.

(USD 1.00 = EUR 0.694)

Rating agency website: www.standardandpoors.com

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