Hong Kong, January 30, 2019 -- Moody's Investors Service has assigned a Ba3 senior unsecured debt
rating to the proposed USD senior perpetual capital securities to be issued
by Champion Sincerity Holdings Limited and irrevocably and unconditionally
guaranteed by Greentown China Holdings Limited.
Greentown plans to use the proceeds of the new USD notes issuance to refinance
existing indebtedness and for general working capital purposes.
RATINGS RATIONALE
"The proposed note issuance will not have a material impact on Greentown's
credit metrics, because the proceeds will mainly be used to refinance
existing debt," says Celine Yang, a Moody's Assistance
Vice President and Analyst.
Greentown's Ba3 corporate family rating continues to reflect its standalone
credit strength and a two-notch rating uplift, based on Moody's
expectation that the company will receive extraordinary financial support
from China Communications Construction Group (Limited) (CCCG), its
largest shareholder, in times of financial distress.
Greentown's B2 standalone credit strength reflects its (1) well-established
market position in property development in Hangzhou City and Zhejiang
Province, (2) long operating track record, in particular,
its established brand name, quality products and land bank with
70% of saleable value located in first and second tier cities,
(3) improved financial management and access to funding as part of CCCG;
and (4) adequate liquidity
However, the B2 standalone credit strength is constrained by its
improving but still moderate financial metrics, as a result of debt-funded
growth and operating challenges stemming from its growth through joint
ventures and associates.
The Ba3 rating for the notes reflects the following factors:.
(1) Moody's considers the proposed perpetual securities as pure debt instruments
and accordingly, does not apply any equity treatment to these securities.
(2) The perpetual securities will be irrevocably and unconditionally guaranteed
by Greentown, which implies that the rating on the perpetual securities
is closely linked to Greentown's rating.
(3) The securities will rank pari passu with all other present and future
senior obligations of Greentown.
The positive ratings outlook reflects Moody's expectation that Greentown
will maintain financial discipline, generate steady growth in contracted
sales and control its debt growth, while pursuing an expansion strategy
in the coming 12-18 months.
Greentown's ratings could be upgraded if the company (1) continues to
show prudence in its financial management and land acquisition strategy;
and (2) improves its debt leverage, such that revenue/adjusted debt
— including its share in joint ventures and associates — is
maintained above 60%-70% and EBIT/interest —
including shares in joint ventures and associates — is maintained
above 2.5x.
A downgrade of Greentown's ratings is unlikely in the near term,
given the positive ratings outlook. However, the outlook
could return to stable, if the company's credit metrics are unlikely
to improve to levels that will support an upgrade over the next 12-18
months.
The principal methodology used in this rating was Homebuilding And Property
Development Industry published in January 2018. Please see the
Rating Methodologies page on www.moodys.com for a copy of
this methodology.
Greentown China Holdings Limited is a major property developer in China,
with a primary focus in Hangzhou City and Zhejiang Province.
At 30 June 2018, the company had 106 projects with a total gross
floor area of 32.97 million square meters (sqm), with 20.73
million sqm attributable to the company.
REGULATORY DISCLOSURES
For ratings issued on a program, series or category/class of debt,
this announcement provides certain regulatory disclosures in relation
to each rating of a subsequently issued bond or note of the same series
or category/class of debt or pursuant to a program for which the ratings
are derived exclusively from existing ratings in accordance with Moody's
rating practices. For ratings issued on a support provider,
this announcement provides certain regulatory disclosures in relation
to the credit rating action on the support provider and in relation to
each particular credit rating action for securities that derive their
credit ratings from the support provider's credit rating.
For provisional ratings, this announcement provides certain regulatory
disclosures in relation to the provisional rating assigned, and
in relation to a definitive rating that may be assigned subsequent to
the final issuance of the debt, in each case where the transaction
structure and terms have not changed prior to the assignment of the definitive
rating in a manner that would have affected the rating. For further
information please see the ratings tab on the issuer/entity page for the
respective issuer on www.moodys.com.
For any affected securities or rated entities receiving direct credit
support from the primary entity(ies) of this credit rating action,
and whose ratings may change as a result of this credit rating action,
the associated regulatory disclosures will be those of the guarantor entity.
Exceptions to this approach exist for the following disclosures,
if applicable to jurisdiction: Ancillary Services, Disclosure
to rated entity, Disclosure from rated entity.
Moody's considers a rated entity or its agent(s) to be participating
when it maintains an overall relationship with Moody's. Unless
noted in the Regulatory Disclosures as a Non-Participating Entity,
the rated entity is participating and the rated entity or its agent(s)
generally provides Moody's with information for the purposes of
its ratings process. Please refer to www.moodys.com
for the Regulatory Disclosures for each credit rating action under the
ratings tab on the issuer/entity page and for details of Moody's
Policy for Designating Non-Participating Rated Entities.
Regulatory disclosures contained in this press release apply to the credit
rating and, if applicable, the related rating outlook or rating
review.
Please see www.moodys.com for any updates on changes to
the lead rating analyst and to the Moody's legal entity that has issued
the rating.
Please see the ratings tab on the issuer/entity page on www.moodys.com
for additional regulatory disclosures for each credit rating.
The first name below is the lead rating analyst for this Credit Rating
and the last name below is the person primarily responsible for approving
this Credit Rating.
YuYing (Celine) Yang
Asst Vice President - Analyst
Corporate Finance Group
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Franco Leung
Associate Managing Director
Corporate Finance Group
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077