Moody's rates Yuzhou Properties notes B1

Moody's Investors Service said it assigned a B1 rating to Yuzhou Properties Co. Ltd.'s proposed senior unsecured dollar-denominated notes.

The outlook is stable.

The proceeds will be used to refinance its existing indebtedness and for general working capital purposes, Moody's said.

The proposed bond issuance will support Yuzhou's liquidity profile and will not materially affect its credit metrics because the company will use the proceeds mainly to refinance existing debt, the agency said.

Moody's said it predicts Yuzhou's leverage will gradually recover to between 63% and 68% in 2019 through 2020 from about 50% for the 12 months that ended June 2018.

This will be driven by likely stronger revenue and controlled debt growth in 2019 and 2020, the agency said.

Yuzhou has maintained a good track record of high profit margins, Moody's said.

The ratings also are supported by the company's track record of developing and selling residential properties, the agency said, and its growing operating scale and improved geographic diversification.

The ratings are constrained by high debt leverage for its Ba3 rating level, Moody's said.

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