Fitch: Evergrande unaffected

Fitch Ratings said the ratings on Evergrande Real Estate Group Ltd. (BB-/stable) and its bonds due in 2018 and 2020 will not be affected even if the proposed amendments in the consent solicitation announced on Feb. 1 are adopted.

The principal purpose of the consent solicitation is to align the terms of the company's 2018 and 2020 notes with the bond that it recently issued on Jan. 15 (the 2019 notes), and give the company more flexibility in offshore and onshore debt-raising, liens of debt, investments in subsidiaries and minority-owned joint ventures, dividend pay-outs and stock repurchases, as well as business diversification beyond its core real estate development business.

The proposed amendments, if adopted, will provide Evergrande with more funding and operational flexibility to support its current expansion and business diversification, though it would require a higher level of debt.

Fitch said it does not expect its view on Evergrande to change solely due to the adoption of the proposed amendments.

However, Evergrande's rating may come under pressure in the event that expansion drives leverage, as measured by net debt/adjusted inventory, to above 60%, and contracted sales/total debt below 0.6 times, both on a sustained basis, the agency said.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.