Moody’s lowers Longfor to junk

Moody’s Investors Service said it lowered its ratings for Longfor Group Holdings Ltd., removed its Baa3 issuer rating and assigned a Ba1 corporate family rating. The agency also downgraded its senior unsecured ratings to Ba2 from Ba3. Moody’s also changed the outlook to negative from rating under review for downgrade.

"The rating downgrades are driven by our expectation that Longfor's contracted sales, credit metrics, financial flexibility and liquidity buffer will decline over the next 12-18 months amid the volatile market and funding conditions," said Kaven Tsang, a Moody's senior vice president, in a press release.

The agency also noted Longfor’s increased use of secured debt, which reduces its financial flexibility and raises the subordination risks for unsecured creditors.

"The negative outlook reflects the high uncertainties over the company's ability to recover its contracted sales, credit metrics and access to debt capital markets over the next six to 12 months, given the current volatile market and funding conditions," added Tsang, who is Moody's lead analyst for Longfor.

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