S&P rates Sunac China notes B

S&P said it assigned a B long-term issue rating to a proposed issue of dollar-denominated senior unsecured notes by Sunac China Holdings Ltd.

The proceeds will be used to refinance its existing debt.

The outlook is positive.

The notes are rated one notch lower than the issuer credit rating on Sunac to reflect structural subordination risk, S&P explained.

As of June 30, 2018, Sunac's capital structure consists of RMB180 billion in secured debt and RMB30 billion in unsecured debt, the agency said.

As such, Sunac's secured debt ratio is about 86%, which is significantly higher than the notching-down threshold of 50%, S&P said.

The agency said it does not expect the new issuance to have any significant impact on Sunac's credit profile.

The company is expected to maintain strong sales execution and sustainable profitability while continuing to improve its financial leverage through more controlled spending, S&P said.

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