Fitch rates Longfor notes BBB

Fitch Ratings said it assigned Longfor Group Holdings Ltd.’s proposed dollar-denominated senior unsecured notes a BBB rating.

The proposed notes are rated at the same level as Longfor’s senior unsecured rating because they will constitute its direct and senior unsecured obligations. The company plans to use the proceeds to refinance debt and for general corporate purposes.

Longfor’s rating is supported by the continued improvement in its business profile. It has extended its leadership position in the development and investment property businesses while maintaining strict financial stability. The company remained one of China’s leading homebuilders by contracted sales in 2019, with projects spread across the country and clear home-buyer product segmentation, Fitch said.

“We expect Longfor to continue increasing its recurring rental income from its investment properties, which include shopping malls and rental apartments, through consistent investments without pressuring its leverage. We forecast Longfor’s recurring EBITDA/gross interest will rise to 0.71x in 2019 and reach 0.85x by 2020, from 0.64x-0.65x in 2017-2018, which supports its credit profile,” said Fitch in a press release.

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