Moody’s slices China Vanke

Moody’s Investors Service said it cut China Vanke Co. Ltd.’s issuer ratings to Baa3 from Baa1 and the backed senior unsecured rating on the bonds issued by Vanke Real Estate (Hong Kong) Co. Ltd. to Ba1 from Baa2. Moody’s also dropped the medium-term note program to (P)Ba1 from (P)Baa2.

"The downgrades reflect China Vanke's weakening contracted sales, which underperformed the broader market in the first ten months of the year, and our expectation that the company's credit metrics and liquidity buffer will weaken over the next 12-18 months," said Kaven Tsang, a Moody's senior vice president, in a press release.

"In addition, it remains uncertain if China Vanke will be able to maintain timely access to long-term unsecured funding. Such uncertainty amid sizable refinancing needs in the next 12-18 months would constrain the company's financial flexibility and weakly position its rating relative to its Baa-rated Chinese property peers," Tsang added.

The outlook remains negative.

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