Fitch downgrades Modern Land

Fitch Ratings said it downgraded Modern Land (China) Co., Ltd.'s long-term foreign- and local-currency issuer default rating to B from B+.

The outlook is stable.

Fitch also said it downgraded the senior unsecured rating to B from B+ with a recovery rating of RR4.

The downgrades reflect a belief that Modern Land's leverage, measured by net debt over adjusted inventory, will remain higher than 40% for the next 18- to 24-months, Fitch said.

The agency said it estimates that Modern Land's leverage would have been about 40% at year-end 2018, compared to 47% at year-end 2017, the agency said.

Modern Land's EBITDA margin also has been weak over the past few years, Fitch added.

The agency added that it expects continued pressure on Modern Land to acquire land in 2019 to sustain sales growth.

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