Moody's downgrades Country Garden

Moody's Investors Service said it downgraded Country Garden Holdings Co. Ltd.'s corporate family rating to Ca from Caa1 and its senior unsecured rating to C from Caa2.

"The rating downgrades with negative outlook reflect Country Garden's tight liquidity and heightened default risk, as well as the likely weak recovery prospects for the company's bondholders," said Kaven Tsang, a Moody's senior vice president, in a statement.

The agency noted that even with RMB 101 billion in unrestricted cash as of June, it estimates Country Garden lacks the cash to handle its upcoming offshore bond maturity, given its weakening sales and sizable maturing debt over the next 12-18 months.

On Wednesday, Country Garden said it plans to sell 350.65 million shares for a total of HK$270 million to help repay its debt. Earlier this month, the company missed two coupon payments on U.S. dollar-denominated notes.

The outlook remains negative.

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