Hong Kong, February 19, 2019 -- Moody's Investors Service ("Moody's") has downgraded to Caa1 from B3 the corporate family rating (CFR)
of Yida China Holdings Limited.
At the same time, Moody's has downgraded to Caa2 from Caa1 the senior
unsecured rating of the senior unsecured notes issued by the company.
The rating outlook remains negative.
RATINGS RATIONALE
"The rating downgrade reflects our increased concerns over Yida's
already weak liquidity, due to uncertainty around the financial
condition and debt servicing ability of China Minsheng Investment Corp.,
Ltd., the ultimate parent of Yida's largest shareholder,
Jiayou (International) Investment Limited," says Kaven Tsang,
a Moody's Senior Vice President.
"Yida already faces high debt refinancing risk over the next 12-18
months amid tight credit conditions in China, particularly for small-scale
property developers, and any financial stress at China Minsheng
Investment could raise further pressure," adds Tsang.
Yida's credit profile could be adversely affected if China Minsheng
Investment's financial profile deteriorates, because China
Minsheng Investment -- through its 67.3% subsidiary
Jiayou (International) -- is Yida's largest shareholder.
A deterioration in the financial profile of China Minsheng Investment
could undermine investor confidence in Yida and weaken Yida's ability
to raise new funds.
In addition, there exists a risk of change in ownership if Jiayou
(International) sells its equity interests in Yida to provide funding
support to China Minsheng Investment. Such change could disrupt
Yida's normal operations and trigger the acceleration of debt repayment
obligations.
Moody's estimates that Yida had cash of RMB1.5-2.0
billion (including restricted cash) at the end of 2018. This amount
could not fully cover its maturing debt of around RMB8.8 billion,
including the USD300 million senior notes due in April 2020, and
around RMB3 billion of committed land payments over the next 12-18
months.
Its net operating cash flow from contracted sales of residential properties
is also inadequate to fully cover the funding gap.
Yida's Caa1 CFR reflects the company's established track record in the
development and management of business parks in Dalian. Its rental
and management income from business parks provides the company with some
stable cash flows.
The negative outlook reflects the high uncertainty over the company's
ability to arrange funding on a timely basis to meet its near-term
refinancing needs.
Yida's ratings could be further downgraded if its liquidity profile
weakens further or it defaults on its debt.
The ratings are unlikely to be upgraded, given the negative outlook.
However, the outlook could return to stable if the company (1) improves
its liquidity; (2) improves its access to funding and refinances
its maturing debt at reasonable costs; and (3) maintains normal and
sustainable operations. Satisfactory resolution of the parent group's
near-term refinancing needs would also be positive to the ratings.
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, and the development and sale of residential properties,
with a focus on Dalian. The company also provides property management
and construction, decoration and landscaping services. Yida
was founded in 1998 by Sun Yinhuan, the ex-chairman of the
company. The company listed on the Hong Kong Stock Exchange in
June 2014.
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.
Kaven Tsang
Senior Vice President
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