Moody’s assigns Longfor notes Baa3

Moody’s Investors Service said it assigned a Baa3 senior unsecured rating to the proposed dollar-denominated notes to be sold by Longfor Group Holdings Ltd., which Moody’s rates Baa3 positive.

Longfor plans to use the proceeds to refinance indebtedness and for corporate purposes.

“The proposed bond issuance, if completed, will have limited impact on Longfor’s credit profile, given that the proceeds will mainly be used to refinance the company’s existing debt,” said Kaven Tsang, a Moody’s senior vice president, in a press release

Moody’s said it expects Longfor’s revenue/adjusted debt to trend towards 100%-110% over the next 12-18 months from 85% for the 12 months ended June 30. And, Moody’s expects the company’s EBIT/interest will improve to 7x-7.5x from 6.9x over the same period. These projected ratios are strong for Longfor’s Baa3 ratings.

The improvement in debt leverage is a result of a likely increase in revenue recognition from the strong contracted sales recorded in the past two years. The revenue growth will also outpace the growth in debt, based on Moody’s expectation that the company will maintain a disciplined approach in pursuing growth, the agency said.

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