Moody’s revises Guangzhou Construction view to negative

Moody's Investors Service said it revised its outlook for Guangzhou City Construction Investment Group Co., Ltd. to negative from stable.

“The negative outlook reflects the higher-than-expected leverage of Guangzhou City Construction after the consolidation of Guangzhou Industrial Fund Management Co. Ltd.,” said Chenyi Lu, a Moody's vice president and senior credit officer, and Moody's international lead analyst for Guangzhou City Construction.

Guangzhou City Construction's capital spending will likely increase to RMB 35 to RMB 40 billion in 2019 from around RMB 10 billion in 2018, the agency said.

Moody's estimates most of the spending will be funded by debt, cash on hand, operating cash flow and recurring government grants.

Moody’s affirmed the company’s A3 rating. The agency said it took into account Guangzhou City’s high level of dependence and high level of support from the Chinese government if needed.

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