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Published on 6/11/2019 in the Prospect News Emerging Markets Daily.

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 lengthen Sunac's debt maturity profile and will not have a material impact on its credit metrics because the proceeds will be used mainly to refinance existing debt, Moody's said.

The agency said it expects that Sunac's revenue-to-adjusted debt will improve 75% to 80% over the next 18 months, from about 60% in 2018.

This is supported by an expected increase in revenue recognition from strong contracted sales and controlled spending on land purchases and non-property investments, Moody's said.

Likewise, Sunac's interest coverage, as measured by adjusted EBIT/interest, will likely improve to 3x to 3.2x, from about 2.6x during the same period, the agency said.

The ratings reflect the company's strong sales execution, leading brand and market position in China's tier 1 and tier 2 cities, Moody's said.

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


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