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Fitch revises view on Xinyuan to negative
Fitch said it revised the outlook on Chinese homebuilder Xinyuan Real Estate Co., Ltd.'s long-term foreign-currency issuer default rating to negative from stable and affirmed the rating at B.
The agency has also affirmed Xinyuan's senior unsecured rating at B with a recovery rating of RR4.
“The negative outlook reflects Xinyuan's leverage, denoted by net debt/adjusted inventory, which spiked to 58% in 1H18, from 45% in 2016, as the company significantly increased land acquisitions to sustain its operations, including expanding outside of its established market of Zhengzhou city in Henan province to mitigate regional economic and policy risk,” Fitch said in a news release.
“Fitch believes Xinyuan will slow its acquisition pace, but that there is inherent execution risk in launching projects outside of established cities amid weakening market sentiment, which may reduce its deleveraging.”
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