Fitch downgrades Sunac, notes to BB-

Fitch Ratings said it downgraded Sunac China Holdings Ltd.’s long-term foreign-currency issuer default rating, senior unsecured rating and the rating on its outstanding $400 million 8¾% senior notes due 2019 to BB- from BB.

The agency also put all the ratings on watch negative.

Fitch said the ratings were downgraded to reflect the company's acquisitive business approach, which will make its financial profile more volatile. Current industry dynamics, where land bank expansion through project acquisition is prevalent, will likely drive Sunac to continue making acquisitions.

As a result, leverage, as measured by net debt/adjusted inventory, is likely to be changeable, after it jumped to 60% by end-2016, from 26% and 19% at end-2015 and end-2014, the agency added.

The ratings are on negative watch because its plan to acquire Dalian Wanda Commercial Property Co. Ltd.'s (BBB/negative) assets will put pressure on Sunac's leverage over the next 12 months.

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