S&P cuts Guangzhou R&F

S&P said it downgraded Guangzhou R&F Properties Co. Ltd.’s issuer rating to SD from CC, but affirmed the CC rating on subsidiary R&F Properties (HK) Co. Ltd. (R&F HK).

The downgrade follows the completion of the company's extension of the maturity on its RMB 1.95 billion onshore corporate bond that was due Thursday. S&P said it considers the extension the equivalent of default.

“We view the transaction as a distressed restructuring tantamount to a default. Had it not extended, Guangzhou R&F likely would have lacked the resources and funding options to fully repay the maturing renminbi bonds. The issuer has delayed repayment of the principal by up to a year without adequately compensating investors, in our view,” S&P said in a press release.

The agency warned the two companies face RMB 8 billion of onshore bonds that are either maturing or puttable within the year and more than $1.2 billion of offshore bonds coming due in the same period.

The outlook on R&F Properties is negative.

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