Fitch rates China Vanke notes BBB+

Fitch Ratings said it assigned China Vanke Co., Ltd.'s (BBB+/stable) proposed dollar-denominated senior notes a BBB+(EXP) expected rating.

The proposed notes are issued under the company’s medium-term note program rated BBB+.

The proposed notes will be issued by Vanke Real Estate (Hong Kong) Co. Ltd. (Vanke HK).

China Vanke granted a keepwell deed and a deed of equity interest purchase undertaking to ensure that the guarantor, Vanke HK, has sufficient assets and liquidity to meet its obligations under the program.

Fitch said the rating is driven by China Vanke’s position as one of the three largest homebuilders by sales in China and its ability to maintain a healthy financial profile. Contracted sales have risen by a CAGR of over 20% since 2007, reaching RMB 396 billion in the nine months of 2017.

“Vanke's EBITDA margin has averaged around 22% over the past three years and its churn rate (as measured by contracted sales to gross debt) of 2.5x as at 30 September 2017 remained the highest among rated peers, although it has fallen from 2.6x in 2016 and 3.0x in 2015,” the agency explained in a news release.

Leverage, as measured by net debt to adjusted inventory, remained very low at 13% in the first half of the year, compared with industry peers.

© 2015 Prospect News.
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