Hong Kong, March 02, 2020 -- Moody's Investors Service has downgraded Yida China Holdings Limited's
("Yida") corporate family rating (CFR) to Caa2 from Caa1.
At the same time, Moody's has downgraded the senior unsecured
rating on the bond issued by Yida to Caa3 from Caa2.
The outlook on the ratings remains negative.
RATINGS RATIONALE
The actions follow the announcement of Yida's debt exchange offer on 27
February 2020. The company proposed to exchange its existing $300
million offshore bond with 6.95% coupon issued in 2017 and
maturing in April 2020, with 8% of the principal in cash,
and the remaining 92% to be exchanged with new notes. The
new notes, due in 2022, will bear interest at 10.0%
per annum for the first six months and 14.0% per annum for
the remaining term of the new notes.
Yida estimates that its internal resources are insufficient to repay the
existing bond.
The company's liquidity has deteriorated due to weakening access
to the capital markets, following the assets freeze at China Minsheng
Investment Group Corp., Ltd.; a company which
is also the ultimate parent of Yida's largest shareholder,
Jiayou (International) Investment Limited.
Moody's considers Yida's debt exchange offer as a way to avoid default,
given its constrained liquidity profile. The offer can therefore
be viewed as a distressed exchange, which is a default under Moody's
definition.
Yida's Caa2 CFR reflects its high refinancing risk, because
of its weak liquidity and the growing uncertainty over its ability to
refinance maturing debt over the next 12-18 months, due to
the weak financial condition and debt-servicing ability of China
Minsheng Investment Corp. Ltd.
In addition, the CFR reflects the company's small operating scale,
high geographic concentration and high debt leverage.
On the other hand, Yida's CFR also takes into account the company's
established track record in the development and management of business
parks in China.
The negative outlook considers Moody's concerns over Yida's
weak liquidity, and ability to arrange funding on time to meet its
refinancing needs.
Although not anticipated in the intermediate term, Moody's
could upgrade Yida's ratings if the risks of potential debt restructuring
and distressed exchanges subside, and financial and liquidity positions
improve significantly.
But Moody's could downgrade the rating if further restructuring
risks loom, the company is unsuccessful in extending its debt maturities,
or its liquidity profile weakens, such that it cannot meet its debt
service obligations.
The principal methodology used in these ratings 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.
Yida China Holdings Limited engages in the development and operation of
business parks in China, and the development and sale of residential
properties, with a focus on the city of Dalian. The company
also provides property management and construction, decoration and
landscaping services in China.
At 30 June 2019, Yida owned 11 business parks in operation.
Its revenue totaled RMB7.4 billion in 2018.
REGULATORY DISCLOSURES
For ratings issued on a program, series, category/class of
debt or security this announcement provides certain regulatory disclosures
in relation to each rating of a subsequently issued bond or note of the
same series, category/class of debt, security 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.
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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
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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.
Josephine Ho
Vice President - Senior 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