Moody’s rates Yuzhou Properties B1

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

Yuzhou intends to use the proceeds to refinance debt.

“The proposed bond issuance will improve Yuzhou’s liquidity and lengthen its debt maturity profile. The issuance will also not materially affect its credit metrics, because the company will use the proceeds to refinance maturing debt, said Celine Yang, a Moody’s assistant vice president and analyst, in a press release.

Yuzhou’s B1 senior unsecured debt rating is a notch below its corporate family rating because of structural subordination risk, the agency said.

This risk reflects that most of the claims are at the operating subsidiaries and have priority over Yuzhou’s senior unsecured claims in a bankruptcy scenario. “In addition, the holding company lacks significant mitigating factors for structural subordination. As a result, the likely recovery rate for claims at the holding company will be lower,” Moody’s said.

The outlook is stable.

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