S&P rates Maoye notes BB

Standard & Poor's said it assigned a BB+ long-term corporate credit rating to Maoye International Holdings Ltd.

The outlook is stable.

The agency also said it assigned a cnBBB+ long-term Greater China regional scale rating to the company, along with a BB long-term issue rating and cnBBB Greater China regional scale rating to the company's proposed U.S. dollar-denominated senior unsecured notes.

The rating is subject to the final issue size and a review of the final bond documents.

The ratings reflect the company's exposure to the highly fragmented and competitive department store industry in China, the agency said, and volatile cash flow from Maoye's ancillary property development business.

The company's fair geographical diversification, market leading positions in a few cities, high proportion of self-owned properties and stable concessionaire model mitigate the weaknesses, S&P said.

Maoye has direct exposure to the cyclical property business, the agency said. This exposure results in higher volatility in Maoye's cash flow compared with its rated department store peers in China, the agency said.

However, the company's business model largely eliminates related-party transactions, S&P said.

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