S&P rates China SCE notes B

S&P said it assigned a B long-term issue rating to a proposed issue of dollar-denominated senior unsecured notes issued by China SCE Group Holdings Ltd.

The company will use the proceeds mainly to refinance certain existing offshore indebtedness, S&P said.

The agency said the proposed senior unsecured notes one notch below the issuer credit rating on China SCE, reflecting significant structural subordination risk.

S&P said it does not expect the new issuance to have a material impact on China SCE's credit profile because the company intends to use the proceeds primarily for refinancing, which may include its $350 million offshore notes callable in April.

The agency said the company's leverage is expected to stabilize at about 6x in 2019, supported by steady sales growth and high margins.

Nevertheless, S&P said it believes the company will continue to pursue sizable land acquisitions in 2019 to replenish its land bank during its expansion.

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