S&P gives B+ to KWG Property notes

Standard & Poor's said it assigned its B+ long-term issue rating to a proposed issue of dollar-denominated senior unsecured notes by KWG Property Holding Ltd. (BB-/negative/--; cnBB/--).

The agency also assigned its cnBB- Greater China regional scale rating to the proposed notes.

KWG will use the issue proceeds to refinance existing debt and to finance existing and new projects.

The issue rating is one notch lower than the corporate credit rating on KWG due to structural subordination.

S&P said the corporate credit rating on KWG reflects the company's weaker leverage than that of similarly rated companies, high exposure to the high-end residential property segment, and execution risk in new cities. However, KWG's well-distributed projects in major cities, good brand recognition and product quality, improving sales execution, and above-average profit margins temper these weaknesses. The significant cash flow contribution from KWG's jointly controlled entities and abundant cash holdings also support the rating, the agency said.

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