Fitch slices Country Garden

Fitch Ratings said it downgraded Country Garden Holdings Co. Ltd.'s long-term foreign- and local-currency issuer default ratings, senior unsecured rating and the rating on its bonds to BB- from BB+. The agency removed the ratings from rating watch negative and assigned a negative outlook.

“The downgrade reflects the property sector's continued poor capital-market conditions, limiting Country Garden's access to unsecured funding and affecting its financial flexibility. Country Garden's contracted sales may have stabilized in recent months and Fitch believes its available cash balance and internal cash generation should be sufficient to cover its medium-term capital-market debt maturities. However, there remains uncertainty over the sustainability of its sales, as well as the availability of its cash on hand,” the agency said in a press release.

The weak outlook reflects the view that the sector's difficult operating and funding environment may continue, further hurting the company's financial flexibility, the agency said.

“However, any change is likely to be gradual, removing the necessity for a rating watch,” Fitch said.

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