S&P cuts KWG to negative

Standard & Poor's said it revised the outlook on KWG Property Holding Ltd. to negative from stable and affirmed the BB- long-term corporate credit rating on KWG and the B+ issue rating on the company's outstanding senior unsecured notes.

As a result of the outlook revision, S&P said it also lowered its long-term Greater China regional scale rating on KWG to cnBB from cnBB+ and on the notes to cnBB- from cnBB.

"We revised the outlook to negative because KWG's cash flow adequacy, including its debt-to-EBITDA ratio and EBITDA interest coverage, could become weak for the rating. Our view is based on our expectation of KWG's weaker sales execution compared with peers', likely lower margins due to price-cutting, and increasing interest expenses. The prospect for recovery in 2013 is uncertain," said S&P credit analyst Bei Fu in a news release.

"Nevertheless, we expect KWG to manage its expansion and balance sheet."

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