Fitch downgrades Huarong Real Estate

Fitch Ratings said it downgraded Huarong Real Estate Co., Ltd.'s long-term issuer default rating to A- from A, along with the senior unsecured notes issued by its wholly owned subsidiary, Huarong Universe Investment Holding Ltd. to A- from A.

All of the ratings were also placed on Rating Watch negative.

The downgrades follow a weakened linkage between Huarong Real Estate and its parent, China Huarong Asset Management Co., Ltd., Fitch said, as well as an exposure to non-core activities.

The negative watch also reflects the uncertainty of Huarong Real Estate's direction as it refocuses its business model, as well as the potential losses arising from its non-core investments and how this may affect its importance to the parent, the agency said.

Fitch said it expects Huarong Real Estate to prioritize its business agenda and refocus on property-related distressed asset development.

The notching difference reflects Huarong Real Estate's developing synergy with the parent group as it repositions itself in the distressed asset-based property development industry, the agency said.

The ratings are also credit linked to the Chinese sovereign and notched down once, reflecting the company's state-level majority ownership, Fitch said.

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