S&P rates Powerlong Real Estate notes B

S&P said it assigned its B long-term issue rating to Powerlong Real Estate Holdings Ltd.’s $200 million of senior unsecured notes due 2024 and its proposed tap issuance, which will form one series with the same terms.

“The tap should have minimal impact on Powerlong’s financial leverage, given the Chinese property developer intends to use the proceeds to refinance existing debt,” S&P said in a press release.

S&P rates the notes, including the tap, one notch below the B+ issuer credit rating on Powerlong to reflect structural subordination risk, the agency said.

“As of June 30, 2020, Powerlong’s capital structure consisted of Chinese renminbi (RMB) 31.4 billion in secured debt and RMB 27.9 billion in unsecured debt. The company’s secured debt ratio is 53%, above our 50% threshold for notching down an issue rating, and we expect it to sustain the ratio at that level,” S&P said.

The outlook is positive.

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