S&P puts Yuexiu REIT on watch

S&P said it placed the BBB long-term corporate credit rating and cnA- long-term Greater China scale rating on Yuexiu Real Estate Investment Trust (Yuexiu REIT) on CreditWatch with negative implications.

The agency also said it placed the BBB and cnA- long-term issue ratings on the REIT's outstanding senior unsecured notes and guaranteed medium-term notes program on negative watch.

The negative watch is due to the delay of a debt-reduction exercise that was previously expected, S&P explained.

In addition, the REIT has not finalized the refinancing of its HK$2.85 billion offshore bank loan, which is due Dec. 19, 2016.

This debt maturity could adversely affect the current adequate liquidity assessment on the company, the agency said.

S&P said it believes Yuexiu REIT's strategy to de-leverage the balance sheet is being tested, as no debt-reduction action has materialized since the revision of the outlook to negative from stable in February 2016.

The REIT's debt leverage credit metrics weakened following its debt-funded acquisition last year of Hongjia Tower, the agency said.

S&P said it expected the company to de-leverage through either the issuance of new equity units or asset sales, but these have yet to happen.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.