Moody’s may lower Lifestyle

Moody's Investors Service said it placed Lifestyle International Holdings Ltd.'s Baa3 issuer rating on review for downgrade.

The agency also said it placed on review for downgrade the Baa3 senior unsecured debt ratings on the notes issued by LS Finance (2017) Ltd., LS Finance (2022) Ltd. and LS Finance (2025) Ltd.

These notes are guaranteed by Lifestyle, Moody’s noted.

Lifestyle's acquisition and development of the Kai Tak land lot in Hong Kong represents a sizable transaction that will increase its debt leverage, erode the size of its financial buffer and increase its business and development risks over the next few years, the agency explained.

An increase in the use of secured debt funding also is expected to reduce the company's financial flexibility and increase subordination risk for holders of senior unsecured bonds, Moody’s said.

Lifestyle announced Nov. 23 that it won a bid for a land lot in Kai Tak for HK$7.4 billion, the agency said. The company does have sufficient cash and availability under its existing syndicated bank facility to fund the purchase, Moody’s said.

But the project will significantly reduce the company's financial buffer, which supports its current Baa3 ratings, the agency said.

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