S&P lowers Oceanwide regional ratings, view negative

Standard & Poor’s said it revised the outlook on Oceanwide Holdings Co. Ltd. to negative from stable.

The agency also said it affirmed the company’s B long-term corporate credit rating and on the outstanding senior unsecured notes that the company guarantees.

In line with the outlook revision, the agency said it lowered the long-term Greater China regional scale ratings on Oceanwide and on the notes to cnB+ from cnBB-.

The notes were issued by Oceanwide Real Estate International Holding Co. Ltd.

The outlook revision reflects a view Oceanwide’s leverage may not be able to meaningfully improve over the next 12 months, such that the company’s EBITDA interest coverage remains below the downgrade trigger of 1x, the agency said.

The company’s aggressive growth appetite and acquisitions in the past two years led total borrowings to increase to RMB 42 billion from RMB 26 billion, S&P said, while revenues only grew 2% over the same period.

Oceanwide’s sales execution and project deliveries will need to significantly improve to offset the increased leverage, the agency said.

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