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Fitch cuts Evergrande Real Estate notes
Fitch Ratings said it downgraded Evergrande Real Estate Group Ltd.'s long-term foreign-currency issuer default rating and the rating of the existing $750 million notes due 2015 to BB from BB+ and placed the ratings on Rating Watch negative.
The downgrade follows news that Evergrande will issue $600 million of new notes due 2015 on the same terms of the existing $750 million notes.
The proceeds will be used for general corporate purposes and project acquisitions, Fitch said.
The agency said the new notes issue will immediately boost Evergrande's liquidity reserve and provide significant flexibility for further business expansion.
However, Fitch noted that such an issuance is opportunistic and will lead to deterioration of Evergrande's credit metrics. Any potential acceleration of Evergrande's expansion strategy, as indicated by management, may signal a long-term change in the company's risk appetite, the agency said.
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