Fitch: Sunac view to negative

Fitch Ratings said it revised the outlook on Sunac China Holdings Ltd. to negative from stable and affirmed its long-term foreign-currency issuer default rating at BB.

Fitch also said it affirmed Sunac’s senior unsecured rating and the rating on its outstanding $400 million 8¾% senior notes due 2019 at BB.

The negative outlook reflects the company’s surging leverage, which resulted from an urgent need to replenish its land bank so it can maintain its rapid sales expansion, Fitch explained.

The land bank expansion will enhance Sunac’s business profile, but constrains its financial flexibility, the agency said.

The expansion is expected to exhaust Sunac’s leverage headroom with sustained leverage of more than 45%, Fitch added.

And despite the decent quality of most of the acquired land parcels, the agency said it views such fast expansion as jeopardizing the stability of its credit profile.

© 2015 Prospect News.
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