Moody's affirms Hopson

Moody's Investors Service said it affirmed Hopson Development Holdings Ltd.'s Ba2 corporate family and senior unsecured ratings.

The outlook remains stable.

The affirmation follows the company's announcement that it would purchase an 80% interest in Believe Best Investment Ltd. for RMB 6 billion.

"Hopson's debt service coverage metrics will not be materially affected, as the transaction will be two-thirds funded by a new equity issuance and one-third by internal cash reserves," Kaven Tsang, Moody's lead analyst for Hopson, said in an agency rating.

The ratings could be downgraded if Hopson fails to meet Moody's sales expectation, executes aggressive land acquisition or capital expenditures beyond Moody's expectations or experiences a significant downturn in China's property market and does not respond accordingly, the agency said.

The ratings could be upgraded if the company establishes a sustainable track record for sales the next two years, demonstrates an ability to manage its financial profile through China's property cycle, builds a sizable portfolio of stable recurring income and strengthens its liquidity position.

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