S&P puts Country Garden on watch

Standard & Poor's said it placed the BB+ long-term corporate credit rating on Country Garden Holdings Co. Ltd. and the BB rating on its $600 million 2.5% convertible bond due 2013 on CreditWatch with negative implications.

"We placed the ratings on CreditWatch because we believe Country Garden's financial risk profile could further weaken. Significant margin compression, a slower pick-up in sales than its peers, and rising leverage have put downward pressure on the ratings," S&P analyst Bei Fu said in a statement.

For the first six months of 2009, Country Garden's ratio of debt to annualized EBITDA rose to 2.9x from 1.7x in the same period a year earlier.

"In our view, the company's financial metrics are likely to remain weak for the current rating level in the second half of 2009 unless market conditions turn more positive for its projects," Fu said.

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