Moody's may cut Country Garden

Moody's Investors Service said it placed on review for possible downgrade the Ba1 corporate family and senior unsecured convertible bond ratings of Country Garden Holdings Co Ltd. .

The review has been prompted by a concern that the weak Chinese property market and softening property prices will pressure Country Garden's profitability and cash flow, Moody's said. This would, in turn, impair the company's credit metrics to the extent that they may not support its current ratings, the agency said.

The company's increased reliance on domestic borrowings at project and subsidiary level could increase the risk of structural subordination for its senior unsecured convertible bondholders at the holding company, Moody's said.

In its review, the agency said it will evaluate the company's sales strategy under the weak property market and its ability to maintain profitability, liquidity profile and the level of subsidiary and project debts in the next one to two years.

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