Moody's downgrades Sino-Ocean

Moody's Investors Service said it downgraded Sino-Ocean Group Holding Ltd.'s corporate family rating to B3 from Ba3.

Concurrently, the agency cut to B3 from Ba3, the backed senior unsecured ratings on the bonds issued by Sino-Ocean Land Treasure Finance I Ltd., Sino-Ocean Land Treasure Finance II Ltd., and Sino-Ocean Land Treasure IV Ltd. and guaranteed by Sino-Ocean, and to Caa2 from B2, the subordinated, guaranteed perpetual capital securities issued by Sino-Ocean Land Treasure III Ltd. and guaranteed on a subordinated basis by Sino-Ocean. All ratings are under review for further downgrade.

Moody's changed all the outlooks to ratings under review from negative.

"The rating downgrades reflect Moody's concerns over Sino-Ocean's weak corporate transparency, governance practices and liquidity, as reflected in the auditor's qualified opinion stated in the company's 2022 financial results. Moody's expects such developments will likely undermine creditors' confidence and the company's access to funding, which will in turn increase the company's refinancing risks over the next 12-18 months," said Cedric Lai, a Moody's vice president and senior analyst, in a press release.

"The review for downgrade reflects the high uncertainty over Sino-Ocean's ability to maintain access to funding and to rectify any non-compliance of covenants related to its financing to avoid debt acceleration. The review also reflects the uncertain financial and liquidity impacts associated with the company's connection with Sino-Ocean Capital Limited, and the likelihood of its largest shareholder China Life Insurance Co Ltd (China Life) continuing to support Sino-Ocean given the company's deteriorated financial performance," Lai added.

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