Moody’s cuts Yuexiu Property to junk

Moody’s Ratings said it withdrew Yuexiu Property Co. Ltd.’s Baa3 ratings and assigned a Ba1 corporate family rating. The agency also lowered to (P)Ba1 from (P)Baa3 the backed senior unsecured rating on the medium-term note program of Westwood Group Holdings Ltd., guaranteed by Yuexiu Property, and to Ba1 from Baa3 the backed senior unsecured rating on the bonds issued by Westwood Group and Joy Delight International Ltd. and guaranteed by Yuexiu Property.

The outlook remains negative.

"The downgrade and negative outlook reflect our expectation that Yuexiu Property's credit metrics will remain weak for its standalone credit profile amid the protracted property market downcycle, given that its contracting margins and rising debt level have more than offset the impact of its solid contracted sales performance in 2023 and its sound liquidity position," said Kaven Tsang, a Moody's senior vice president, in a press release.

The agency said it forecasts Yuexiu Property's debt leverage, as measured by adjusted debt/EBITDA, will stay elevated at 6.5x-7x over the next one to two years, following an increase to around 7.3x in 2023 from 5.4x in 2022. Its EBIT/interest will linger at around 3x over the same period after falling to around 3.1x in 2023 from 3.9x in 2022. The forecast no longer supports the company's previous investment-grade profile.

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