S&P gives KWG notes B+, puts on review

S&P 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-/Watch Neg/--; cnBB+/Watch Neg/--).

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

The issue ratings are on CreditWatch with negative implications.

KWG will use the issue proceeds to refinance its existing debt.

The issue rating is one notch lower than the company’s corporate credit rating due to structural subordination.

S&P said the CreditWatch placement reflects its expectation that KWG's financial position is likely to weaken more than earlier expected under the agency’s base-case scenario for the rating. The likely deterioration follows the company's recent significant land acquisition in Hong Kong and its active land purchases in mainland China in 2016.

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