Moody's rates China Aoyuan notes B2

Moody's Investors Service said it assigned a B2 senior unsecured rating to the proposed notes to be issued by China Aoyuan Group Ltd.

The outlook is stable.

The proceeds will be used to refinance existing offshore indebtedness and for general working capital purposes, Moody's said.

The proposed notes issuance will support China Aoyuan's liquidity and will not have a material impact on its credit metrics because the proceeds will mainly be used to refinance its offshore debt, the agency explained.

The proposed issuance also lengthens the company's debt-maturity profile, Moody's said.

The company is expected to maintain financial discipline and control its debt growth, the agency added, while pursuing an expansion strategy in the coming 12- to 18-months.

China Aoyuan's contracted sales momentum also has remained strong so far in 2019, Moody's said.

The rating reflects the company's good land bank in the Greater Bay area and track record in economically strong Guangdong province, the agency said.

The rating is constrained by the company's moderate credit metrics and by the execution risks associated with its rapid expansion plans and hence continued high capital requirements, Moody's said.

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