Moody’s revises Kaisa outlook to negative

Moody's Investors Service said it changed the outlook on Kaisa Group Holdings Ltd.'s Ba3 corporate family and senior unsecured debt ratings to negative from stable.

The agency has also affirmed Kaisa's Ba3 corporate family and senior unsecured debt ratings.

The change in outlook follows Kaisa's Dec. 10 announcement that with effect from Dec. 31, Kwok Ying Shing will resign as the executive director, chairman of the board, chairman of the nomination committee, member of the remuneration committee and authorized representative of the company for the purpose of the Listing Rules.

"The current chairman has led Kaisa for a long time, and the negative outlook reflects our concern that his resignation could affect the competitiveness of the company and add uncertainty over its future business strategy," Moody's vice president and senior analyst Franco Leung said in a news release.

At the same time, the company announced a change in the composition of its board of directors. Two new board members will join the board, and both have a previous relationship with Sino Life. While Sino Life adds financial strength to the company's shareholder profile, it is not strong in the property development business, the agency said.

Moody's also noted that Kaisa has yet to fulfill the requirement of the Listing Rules that independent non-executive directors represent one-third of the board of directors.

This change in senior management and the company's inability to register presale contracts – reported in Moody's Dec. 8 comment – pressure its Ba3 ratings, as these developments could affect its access to funding and increase its funding costs for any new offshore funding.

© 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.