Moody's cuts Evergrande, units

Moody's Investors Service said it downgraded the corporate family rating and senior unsecured ratings of China Evergrande Group, the CFRs of Hengda Real Estate Group Co. Ltd. and Tianji Holding Ltd., and the backed senior unsecured ratings of Scenery Journey Ltd.

The agency lowered Evergrande's CFR to Caa1 from B2, and its senior unsecured ratings to Caa2 from B3. Moody’s also cut Hengda's CFR to Caa1 from B2, Tianji's CFR to Caa2 from B3 and Scenery Journey's backed senior unsecured ratings to Caa2 from B3. The backed senior unsecured rating on the notes issued by Scenery Journey are guaranteed by Tianji.

Moody's also changed the outlook to negative from under review. These actions conclude the review for downgrade started on June 30, the agency said.

"The downgrades reflect Evergrande's heightened refinancing risk over the coming 12-18 months given its weakened funding access and liquidity position. We also expect its profit margins to decline as the company lowers the selling prices of its properties to preserve liquidity," said Cedric Lai, a Moody's vice president and senior analyst, in a press release.

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