S&P rates China SCE Property notes B-

S&P said it assigned a B- long-term issue rating and cnB+ long-term Greater China regional scale rating to a proposed issue of dollar-denominated senior unsecured notes by China SCE Property Holdings Ltd.

The rating is one notch lower than the company’s long-term corporate credit rating to reflect structural subordination risk, S&P said.

The proceeds will be used to refinance existing debt and for working capital purposes, the agency said.

The company’s leverage increased slightly in 2016 with its debt-to-EBITDA ratio rising to about 6.5x from 5.8x in 2015, S&P noted.

Its revenues grew steadily by 17% in 2016 to RMB 12.5 billion, but the gross margin declined to 25% due to a number of low-margin projects in smaller cities, which were sold at discount before 2015, the agency said.

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