Moody's: Country Garden ratings unchanged by issue

Moody's Investors Service said the ratings on Country Garden Holdings Co. Ltd.'s Ba1 corporate family rating and Ba2 senior unsecured debt ratings will not be immediately affected by the company's proposed issuance of dollar-denominated notes.

The outlook remains stable.

The proposed notes issuance will not materially affect Country Garden's financial metrics because the majority of the proceeds will be used to refinance the company's existing debt, Moody's said.

The agency said it expects Country Garden's debt leverage – as measured by revenue to adjusted debt and including guarantees for joint ventures and associates – will improve to 110% to 115% over the next 12 to 18 months from 93% for the 12 months that ended June 30, 2017.

The ratings reflect strong sales execution through property cycles, good geographic coverage and its status as one of the largest developers in China, Moody's said, as well as its established track record in suburban property development in the country.

The ratings are constrained by a compressed profit margin in the company's mass market portfolio, as well as its modest credit metrics for its rating level, due to its fast business expansion and rapid asset turnover model, the agency said.

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