S&P rates Guorui Properties notes B-

S&P said it assigned a B- long-term issue rating to a proposed issue of dollar-denominated senior unsecured notes by Guorui Properties Ltd.

S&P said it rates the notes one notch lower than the issuer credit rating, reflecting subordination risk because the notes rank behind a significant amount of secured debt in the capital structure.

The notes issuance is not expected to have a material effect on Guorui's credit profile because the company intends to use the proceeds mainly to refinance its existing debt, the agency said.

In fact, the issuance could reduce the company's refinancing risk arising from its low cash-to-short-term debt ratio, S&P noted, and enhance its liquidity profile.

The rating reflects an expectation that the company will moderately de-leverage over the next two years, supported by a significant amount of unrecognized revenue and an estimated slowdown in land acquisitions, the agency said.

S&P said it believes Guorui's leverage peaked in 2017 after the company accelerated debt-funded land acquisitions.

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