S&P cuts Shimao Group

S&P said it lowered its ratings for Shimao Group Holdings Ltd. to B- from B+ and its long-term issue rating on the company's senior unsecured notes to CCC+ from B. The agency placed all the ratings on CreditWatch with negative implications.

“Shimao's liquidity has significantly deteriorated–the decline is worse than we previously anticipated. We now assess the company's liquidity to be weak. This reflects our view that Shimao's cash position will continue to erode for a prolonged period as it may need to repay its debt maturities with internal resources (about Chinese renminbi [RMB] 55 billion was due in 2022 as at end of 2021, by our estimate),” S&P said in a press release.

The agency also noted Shimao's recent dispute with a trust company over a loan extension, which signals the company’s increasing difficulty in managing its exposure to nonbank project financing.

S&P said it aims to resolve the CreditWatch as quickly as possible after it has greater visibility on Shimao's asset disposals to evaluate their effect on liquidity restoration and its ability to maintain its bank and nonbank financing channels.

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