Fitch rates Poly Real Estate notes BBB+

Fitch Ratings said it assigned an expected BBB+ rating to Poly Real Estate Group Co. Ltd.'s proposed dollar-denominated senior unsecured notes.

The notes will be issued by Poly Real Estate Finance Ltd. and unconditionally and irrevocably guaranteed by its parent Hengli (Hong Kong) Real Estate Ltd., a wholly owned subsidiary of Poly.

The notes are rated at the same level as Poly's senior unsecured rating as Poly has granted a keepwell deed and a deed of equity interest purchase undertaking to ensure that the issuer and guarantor have sufficient assets to meet their respective obligations for the senior notes, Fitch said.

The proceeds will be used from the proposed notes to refinance existing indebtedness and for general corporate purposes, the agency said.

Fitch said it expects Poly's leverage to have increased to about 50% at end-2017 from 35.9% at end-2016.

Leverage rose in 2017 due to faster land acquisitions and a slower cash-collection rate, the agency explained.

Fitch said it expects Poly's leverage to trend toward 45% in 2018 and 40% from 2019, underpinned by healthy sales growth of 15% to 20% year over year.

The ratings also benefit from the company's moderate operational and strategic linkages with its parent, China Poly, the agency said.

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