S&P: Yuexiu Property on watch

S&P said it placed the BBB- long-term corporate credit rating and cnBBB+ long-term Greater China regional scale rating on Yuexiu Property Co. Ltd. on CreditWatch with negative implications.

The agency also said it placed the ratings on Yuexiu Property on CreditWatch with negative implications, reflecting the high likelihood that a deterioration in the company’s leverage will weaken the credit profile of its parent, Guangzhou Yuexiu Holdings Ltd.

As a core subsidiary, Yuexiu Property contributes a significant 70% of the parent’s non-financial service EBITDA, S&P said.

The rating on Yuexiu Property is equalized to the group credit profile of the parent, the agency said.

Yuexiu Property’s leverage is likely to stay elevated in the next 12 months after it further deteriorated in 2016, S&P said. This is against an expectation of a modest improvement, the agency said.

Yuexiu Property’s debt-to-EBITDA ratio increased to 9.4x in 2016, up from 8.2x in 2015, the agency said.

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