S&P rates Evergrande notes BB-

Standard & Poor's said it assigned a BB- rating to the proposed issue of three- and five-year senior unsecured notes to be issued by Evergrande Real Estate Group Ltd.

The proposed notes will be denominated in Chinese renminbi and settled in U.S. dollars.

The rating is one notch lower than the rating on Evergrande to reflect structural subordination risks.

The proposed notes have the same terms and conditions as those of the $1.3 billion bond issued in 2010, S&P said.

The proceeds will be used to refinance onshore borrowings and for land acquisitions and working capital.

Evergrande will maintain credit ratios that are broadly supportive of a BB corporate credit rating, factoring in the maximum amount that the company could raise from the proposed issue, the agency said.

S&P said its expectation is mainly due to its strong property sales in the past 12 months and improving profitability; trends that are likely to continue in 2011.

Evergrande's aggressive appetite for debt-funded expansion has, however, weakened the company's debt-to-capital ratio, the agency said.

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