Moody’s rates Si Chuan Province JuYang notes B3

Moody's Investors Service said it assigned a B3 rating to the proposed senior secured notes to be issued by Zhong Yi Holdings Ltd., a cross-border entrustment loan lender to Si Chuan Province JuYang Group Ltd. (B2 stable).

Through the assignment of rights of an entrustment loan agreement, the bonds will indirectly benefit from: (a) A personal guarantee provided by the chairman of JuYang; (b) a corporate guarantee provided by Ju Yang and its subsidiaries; and (c) the pledge of shares of three subsidiaries under JuYang, as well as the tangible property assets of Sichuan JuYang Hotel Group Luzhou Hotel Co., Ltd. and Lezhi County JuYang Hotel Investment Co., Ltd.; and certain commercial and car park assets of Lezhi County JuYang Real Estate Development Co., Ltd. and Chisuhi JuYang Real Estate Development Co., Ltd.

Moody’s said the rating reflects its expectation that JuYang will complete the bond issuance on satisfactory terms and conditions, including proper registrations with the National Development and Reform Commission and the State Administration of Foreign Exchange in China (A1 stable).

Net proceeds will be used for the repayment of existing onshore financial debt, working capital purposes, and the acquisition of hotel assets.

The outlook is stable.

The secured bond rating is rated one notch below JuYang's corporate family rating, reflecting the structural complexities of the borrowing arrangements under the cross-border entrustment loan agreement, which is subject to legal and regulatory uncertainty, Moody’s explained.

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