S&P provides BB/cnBBB- to Shimao notes

S&P said it assigned a BB long-term issue rating to a proposed issue of dollar-denominated senior unsecured notes by Shimao Property Holdings Ltd. (BB+/negative/--; cnBBB/--).

The agency also assigned a cnBBB- long-term Greater China regional scale rating to the notes.

The issue rating is one notch lower than the long-term corporate credit rating on Shimao to reflect the structural subordination risk.

Shimao is planning to use the proceeds to refinance existing debt and for general working capital. S&P expects the refinancing could slightly reduce the company's effective interest cost and extend its debt maturity profile. In February, the China-based property developer early-redeemed dollar-denominated senior notes due 2020 with an outstanding principal amount of $800 million.

S&P said the rating on Shimao is unaffected by the new issuance as the company's operating performance is within expectations. The agency anticipates the company will achieve its full-year sales target of RMB 80 billion.

At the same time, S&P forecasts that Shimao's financial leverage will improve to between 4 times and 4.5 times in 2017, driven by steady revenue growth, margin improvement and disciplined debt management.

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