S&P may cut Shanghai Zendai Property

Standard & Poor's said it kept the B+ long-term corporate credit rating on Shanghai Zendai Property Ltd. and the B+ issue rating on the company's outstanding senior unsecured notes on CreditWatch with negative implications, where they were placed in February.

The watch will remain until the company clarifies how it will fund RMB 9.22 billion in land premium due for a Shanghai commercial property project, S&P said, adding that it believes the purchase will put severe pressure on the company's liquidity and balance sheet.

The land premium represents 15x the company's cash on hand at the end of 2009, the agency said, and it will need to be paid within a relatively short period of time.

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