Fitch downgrades LVGEM

Fitch Ratings said it downgraded LVGEM (China) Real Estate Investment Co. Ltd.'s long-term foreign-currency issuer default rating to B- from B. Fitch also trimmed LVGEM's senior unsecured rating and the rating on its outstanding U.S.-dollar senior notes, issued by Gemstones International Ltd., to B- from B with an RR4 recovery rating.

Concurrently, Fitch removed all the ratings from under criteria observation (UCO), on which they were placed on Oct. 20, following the publication of its updated corporate rating criteria. The outlook is negative.

“We believe LVGEM's tight liquidity and the challenging funding environment increase refinancing risk on its capital market instruments that mature or become puttable in 2022. However, LVGEM's capital market investors have been long-term investors in the company and are likely to see stronger contracted sales from the Baishizhou project. Therefore, we do not expect many to exercise their put options,” Fitch said in a press release.

LVGM has CNY 1.4 billion now becoming puttable in August, and CNY 1.4 billion of convertible bonds becoming puttable or maturing in the first half of 2022. LVGEM also has $470 million of offshore bonds maturing in March 2023.

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