Moody’s rates DaFa notes B3

Moody's Investors Service said it assigned a B3 senior unsecured rating to the proposed dollar-denominated bonds to be issued by DaFa Properties Group Ltd. DaFa’s corporate family rating is B2.

“DaFa's B3 senior unsecured debt rating is one notch lower than its CFR because of structural subordination risk. This risk reflects the fact that most of DaFa's claims are at its operating subsidiaries and have priority over its senior unsecured claims at the holding company 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 in a press release.

DaFa plans to use the proceeds mostly to refinance debt.

“The proposed issuance will improve DaFa's liquidity profile and not materially affect its credit metrics because the company will use the proceeds mainly to refinance existing debt,” the agency said.

The outlook is stable.

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