Fitch snips Beijing Capital

Fitch Ratings said it downgraded Beijing Capital Development Holding (Group) Co., Ltd.'s (BCDH) long-term foreign-currency issuer default rating to BBB- from BBB. The agency also lowered BCDH's senior unsecured rating and the rating on Bright Galaxy International Ltd.'s $517 million of 3¼% senior unsecured notes due 2026 and guaranteed by BCDH to BBB- from BBB.

“The downgrade is based on BCDH's weakened stand-alone credit profile (SCP) from elevated leverage and falling sales amid China's property-sector downturn,” Fitch said in a press release.

The agency noted, “We expect monthly sales in 4Q23 to be around September levels, resulting in a 35% yoy decline for the full year 2023. We estimate the fall in sales may ease to 5% in 2024, given a low base in 2023 and China's supportive policies, which may benefit sales in tier-one and strong tier-two cities, where BCDH is focused.”

Fitch said it also projects leverage as measured by net debt/net property assets, including legacy assets held under the holding company - to stay elevated at 55%-60% in the medium term due to weak sales.

The outlook is stable.

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