Moody’s assigns Modern Land notes B3

Moody’s Investors Service said it assigned a B3 senior unsecured rating to the planned dollar-denominated notes to be sold by Modern Land (China) Co., Ltd. Moody’s rates Modern Land B2.

“Modern Land’s B3 senior unsecured debt rating is one notch lower than the company’s B2 CFR due to structural subordination risk. The subordination risk refers to the fact that the majority of Modern Land’s claims are at its operating subsidiaries and, in the event of a bankruptcy, they have priority over claims at the holding company. In addition, the holding company lacks significant mitigating factors for structural subordination. Consequently, the expected recovery rate for claims at the holding company will be lower,” the agency said in a press release.

Modern Land plans to use the proceeds to refinance offshore debt.

The issuance will lengthen Modern Land’s debt maturity profile and improve its liquidity without having a material effect on its credit profile because proceeds will be used to refinance maturing debt, Moody’s said.

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