Moody’s: Sunac China on review

Moody's Investors Service said it placed Sunac China Holdings Ltd.'s B1 corporate family rating and B2 senior unsecured rating under review for downgrade.

This review follows news that Sunac's profit warning for the first half of 2016, Moody’s said.

The company recently advised that profits attributable to shareholders for the first half of 2016 are expected to decline about 90% from the same period in 2015, the agency said.

The review reflects the increasing risk that Sunac will be unable to manage its declining profitability, which translates into weak credit metrics that do not support its B1 corporate family rating, Moody’s said.

Sunac attributed its expected weak performance to an increase in unrealized foreign-exchange losses, a decrease in profits after tax attributable to investments in joint ventures and an increase in its interest-expense ratio for borrowings due to lower amounts of interest being capitalized, the agency said.

The agency also noted that Sunac has shown a trend of declining profitability and there are concerns about the volatile performance of the company’s joint ventures and associated companies.

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