S&P rates Gemdale notes BB-

Standard & Poor's said it assigned a BB- long-term issue rating and cnBBB- long-term Greater China credit scale rating to a proposed issue of renminbi-denominated benchmark size senior unsecured notes by Gemdale (Asia) Holding Ltd. Famous Commercial Ltd. (Famous) and five other offshore subsidiaries of Gemdale Corp.

Gemdale wholly owns Famous and Gemdale (Asia) is a special-purpose vehicle that Famous fully owns.

The rating on the proposed notes reflects that Famous is a highly strategic subsidiary, but not a core subsidiary of Gemdale. Famous and Gemdale are strategically, financially and operationally integrated, S&P said.

But Famous has a limited history of operations, the agency said, and is smaller in scale with its total assets accounting for about 10% of Gemdale's total assets.

The rating also reflects the company's low asset turnover and large exposure to the high-end residential property segment, which is vulnerable to unfavorable regulations, S&P said.

Gemdale's lower profitability and weaker credit ratios than peers also constrain the rating, the agency said.

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