(Yicai Global) Sept. 19 -- Fosun International is only liable for its own debt, which stands at around CNY100 billion (USD14.2 billion), and not that of its subsidiaries, according to Yicai Global research. The firm, which is the listed arm of Chinese health-to-smart-manufacturing conglomerate Fosun, saw its share price sink for two trading days last week amid market rumors that it owes as much as CNY650 billion (USD92.6 billion).

Fosun and its units, including Shanghai Yuyuan Tourist Mart Group and Shanghai Fosun Pharmaceutical Group, had about CNY260 billion (USD37 billion) in interest-bearing loans as of the end of June, according to the Shanghai-based parent firm's first-half financial results. The units are independently responsible for their own debts, it added.

Most of Fosun’s debt at the consolidated level reported in its recent interim results consists of lending by Fosun’s operating subsidiaries, US financial services firm Morgan Stanley said on Sept. 16. The parent company only owes about CNY93 billion (USD13.3 billion), including onshore and offshore bonds as well as bank loans.

Fosun, which has CNY270 billion (USD38.5 billion) in assets, is still in good standing with lenders such as Industrial and Commercial Bank of China and HSBC Bank China that have pledged full support for the company’s main business segments. Fosun had arranged CNY336.7 billion (USD48 billion) in standby credit as of the end of June, with CNY185.5 billion already in use.

However, S&P Global Ratings downgraded Fosun’s long-term issuer rating to BB- from BB on Sept. 16 with a 'negative' outlook. The US credit rating agency said that an unfavorable external market environment increased Fosun's asset disposal risks.

But S&P recognized Fosun's determination to decrease financial leverage and said that negative stories in the press will not impact Fosun’s ability to withdraw funds from banks.

There is no sign that the relationship between Fosun and lenders has weakened, New York-based S&P said, adding that the CNY10 billion (USD1.4 billion) syndicated loan that the firm has recently raised will provide vital support to its liquidity.

It is normal for private firms without government credit to suffer from rating downgrades amid slowing economic growth and the worsening of the refinancing environment on the capital markets, said industry experts.

Fosun International’s share price [HKG:0656] was trading up 1 percent at HKD5.01 (USD0.71) as of 2.30 p.m. China time today.

Editors: Liao Shumin, Kim Taylor