Fitch puts Sunac China on positive watch

Fitch Ratings said it placed Sunac China Holdings Ltd.'s senior unsecured rating and the ratings of all its outstanding notes of B+ on Rating Watch positive following the company's plan to issue dollar-denominated senior notes to refinance its prior-ranking debt, which will lead to reduced subordination of its senior notes.

Sunac's senior unsecured rating will be removed from positive watch and be upgraded to BB- if Sunac successfully launches senior notes at a minimum threshold of $200 million and uses the proceeds to refinance prior ranking debt.

Fitch also said it assigned an expected BB- Sunac's proposed dollar-denominated senior notes.

The final rating of the proposed notes, if launched successfully, will be rated at the same level as Sunac's senior unsecured rating because they will represent the company's direct and senior unsecured obligations.

Fitch said it estimates the liquidation value of Sunac's assets, including net inventory and proportionate share of joint venture assets, improved by year-end-2017 from the first half of 2017.

The improved liquidation value followed Sunac's lower-than-expected land acquisition costs after purchasing the Wanda City assets and Sunac's increased use of offshore senior unsecured debt in the second half of 2017, the agency said.

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