Moody's rates Sunac China notes B1

Moody's Investors Service said it assigned a B1 senior unsecured rating to Sunac China Holdings Ltd.'s proposed dollar-denominated notes.

The proceeds will be used to refinance existing debt.

The proposed bond issuance will support Sunac's liquidity profile and will not materially affect its credit metrics because the proceeds will be used to refinance existing debt, the agency explained.

Driven by an expected increase in revenue recognition from strong contracted sales and controlled spending on land purchases and non-property investments, Sunac's debt leverage will likely improve to 75% to 80% over the next 12- to 18-months, from around 60% in 2018 and around 36% in 2017, Moody's said.

The company's contracted sales are expected to remain solid, but slowdown over the next two years from a high base, the agency said.

Sunac's Ba3 corporate family rating reflects the company's strong sales execution, leading brand and market position in China's tier 1 and tier 2 cities, Moody's said.

The rating also considers Sunac's good liquidity profile, driven by its rapid asset turnover business model, the agency said.

The ratings are constrained by the modest credit metrics associated with Sunac's business expansion, Moody's added.

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