S&P rates Evergrande notes B+/cnBB-

Standard & Poor's said it assigned its B+ long-term issue rating and cnBB- long-term Greater China regional scale rating to a proposed issue of dollar-denominated senior unsecured notes by Evergrande Real Estate Group Ltd. (BB-/negative/--; cnBB/--).

The issue rating is one notch lower than the long-term corporate credit rating on Evergrande to reflect the structural subordination risk.

Proceeds will be used to refinance existing debt.

S&P said the rating reflects Evergrande’s weak financial position due to aggressive debt-funded expansion, its limited record of prudent financial management, and execution risk in new industries. Evergrande's strong sales execution, competitively priced projects and good cost controls temper these weaknesses.

Additional rating support comes from the company's large and geographically diversified project portfolio.

Evergrande's sales performance was solid in 2014, the agency said. The company's contracted sales in 2014 were stronger than that of major peers, at RMB 131.5 billion, and exceeded its full-year sales target.

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