Fitch lowers Country Garden view to stable

Fitch Ratings said it revised the outlook of Country Garden Holdings Co. Ltd. to stable from positive.

The agency also said it affirmed the company’s long-term issuer default rating at BB+ and foreign-currency senior unsecured rating at BB+.

Fitch also affirmed the BB+ ratings on the company’s $900 million 7½% senior unsecured notes due 2020 and $550 million 7 7/8% senior unsecured notes due 2019.

The outlook revision reflects a belief that an upgrade for Country Garden is unlikely in the next 12 months as the company is adjusting its business mix, Fitch said.

Country Garden is repositioning its land bank to target customers in tier 1 and tier 2 cities to compete more effectively in the midst of intense competition in the higher-tier cities, the agency said.

The ratings are supported by cash inflow from annual contracted sales of over ¥100 billion, strong financial flexibility with low interest cost and track record of strong execution, Fitch said.

Moving into the higher-tier cities is a positive development in Country Garden's progression towards becoming a nationwide homebuilder, the agency said.

But this process may take another one- to two-years to reach fruition if the company continues on its current trajectory, Fitch said.

© 2015 Prospect News.
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