S&P cuts Lai Fung to negative

Standard & Poor's said it revised the outlook on Lai Fung Holdings Ltd. to negative from stable.

The agency also said it affirmed its B+ long-term corporate credit rating on Lai Fung, along with the B+ issue rating on its outstanding $200 million senior unsecured notes due 2014.

As a result of the outlook revision, the agency said it lowered the Greater China scale rating on Lai Fung to cnBB- from cnBB.

The outlook revision reflects the slower-than-expected sales at Lai Fung's core property development project, Shanghai May Flower Plaza, S&P said, and its weaker-than-expected contracted sales and cash flow for the fiscal year ending July 31, 2011.

The weak sales will affect Lai Fung's cash flows and leverage with a material deterioration in its credit metrics, the agency said.

The company's property sales will likely remain weak because of the company's exposure to tier-one Chinese cities, where monetary and regulatory tightening has a more severe effect on investor sentiment, thus hurting transactions, S&P added.

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