Moody's cuts Sino Ocean

Moody's Investors Service said it downgraded the 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 Group Holding Ltd. to Ba1 from Baa3, and to Ba3 from Ba2, the rating on the subordinated, guaranteed perpetual capital securities issued by Sino-Ocean Land Treasure III Ltd. and guaranteed on a subordinated basis by Sino-Ocean Group.

Additionally, the agency assigned a Ba1 corporate family rating and withdrew Sino-Ocean Group’s Baa3 issuer rating.

Moody's said it also changed the outlook on Sino-Ocean Group and its subsidiaries to negative from ratings under review. This concludes the rating review started on June 28.

"The rating downgrades reflect our expectation that support from China Life Insurance Co Ltd. (China Life, insurance financial strength rating A1 stable), Sino-Ocean's largest shareholder, will reduce over time, as the deterioration in China's property market would reduce Sino-Ocean's economic and strategic importance to China Life," said Cedric Lai, a Moody's vice president and senior analyst, in a press release.

"The negative outlook reflects Sino-Ocean's weakening standalone credit profile, driven by declining property sales, weak pricing flexibility due to its thin profit margin and deteriorating financial metrics amid challenging operating conditions," added Lai.

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