Fitch rates Yuzhou Properties notes BB-

Fitch Ratings said it assigned an expected BB- rating to Yuzhou Properties Co. Ltd.'s proposed dollar-denominated senior notes.

The notes are rated at the same level as Yuzhou's senior unsecured rating because they constitute direct and senior unsecured obligations of the company, Fitch said.

The proceeds will be used to refinance existing indebtedness, the agency said.

The ratings are supported by the company’s strong contracted sales growth, regional diversification and favorable margin compared with its peers, Fitch said.

Its recent expansion into the Yangtze River Delta will increase its leverage, but Fitch said it believes the increase to about 40% of net debt-to-adjusted inventory in the next 12 months will be reasonable as it has acquired good quality sites and achieved a much larger operating scale.

Fitch also said it expects the company to maintain a robust margin because most of the sites purchased are in major cities in the Yangtze River Delta and have high sales potential.

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