Moody’s lowers Longfor

Moody’s Investors Service said it lowered Longfor Group Holdings Ltd.’s issuer and senior unsecured ratings to Baa3 from Baa2 and placed the ratings on review for further downgrades.

"The rating downgrade reflects our expectation that Longfor's credit metrics and liquidity buffer will decline amid slowing contracted sales, continual margin pressure and still constrained funding access to the debt capital markets," said Kaven Tsang, a Moody's senior vice president, in a press release.

"The review for downgrade reflects high uncertainties over the company's ability to improve its operating performance and recover its access to funding amid uncertain market prospects and volatile funding conditions," Tsang added.

The agency said it expects Longfor's full-year contracted sales to decline by around 10% to about RMB 180 billion in 2023 from RMB 202 billion in 2022 and could decline further in 2024 if market weakness persists.

Moody’s said it also sees the company’s adjusted debt/EBITDA will probably rise to around 5.0x over the next 12-18 months from 4.6x in the 12 months that ended in June.

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