Moody’s may lower Yuexiu REIT

Moody's Investors Service said it placed on review for downgrade the Baa2 issuer rating of Yuexiu Real Estate Investment Trust, along with the provisional Baa2 senior unsecured rating on the medium-term note program of Yuexiu REIT MTN Co. Ltd. and the Baa2 senior unsecured debt rating on the notes issued under the program.

The review is attributed to concerns about Yuexiu REIT's increased level of financial risk arising from its high debt leverage, Moody’s said.

The agency said it is concerned that Yuexiu REIT's debt leverage – as measured by adjusted debt-to-EBITDA – will remain between 9.5x and 10x over the next 12 to 18 months, which is high when compared with 7.9x in 2014.

Moody's noted that Yuexiu REIT's operating performance remains strong.

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