Moody's rates Kaisa notes B2

Moody's Investors Service said it assigned a B2 senior unsecured rating to the existing $400 million and $350 million senior notes issued by Kaisa Group Holdings Ltd. in February and April 2019.

The proceeds of the notes were used by Kaisa mainly to repay existing debt, Moody's said.

Kaisa's B1 corporate family rating reflects the company's strong sales execution in the Guangdong-Hong Kong-Macao Bay area, established track record with high-margin urban redevelopment projects and good quality land banks in high-tier cities, the agency said.

The ratings are constrained by its moderate financial metrics, history of debt restructuring and share suspension and high financing costs, Moody's said.

The ratings are one notch lower than the corporate family rating due to structural subordination risk, the agency said.

This subordination risk refers to the fact that the majority of Kaisa's claims are at its operating subsidiaries and have priority over claims at the holding company in a bankruptcy scenario, Moody's said.

The holding company lacks significant mitigating factors for structural subordination, resulting in a lower expected recovery rate for claims at the holding company, the agency said.

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