S&P cuts Shimao Group

S&P said it lowered Shimao Group Holdings Ltd.’s issuer rating to BB+ from BBB- and the senior unsecured notes to BB from BB+.

“Tough business conditions will hurt Shimao's ability to establish a record of sustaining profitability and leverage. The company's leverage, both consolidated and look-through (proportionately consolidating off-balance sheet joint ventures [JVs]), may not be able to sustain at below 4x in the next one to two years. In our opinion, the margin for error is eroding given Shimao has a very tight headroom to begin with,” S&P said in a press release.

The agency also noted that financing challenges could present problems for Shimao’s liquidity management.

The outlook is negative.

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