Fitch downgrades KWG

Fitch Ratings said it downgraded KWG Group Holdings Ltd.'s long-term foreign-currency issuer default rating to B+ from BB-. The outlook is negative. Fitch also lowered the senior unsecured rating to B+ from BB- with a recovery rating of RR4.

The agency also removed all the ratings from under criteria observation, on which they were placed on Oct. 20, 2021, following the publication of the agency's updated corporate rating criteria.

“The downgrade and negative outlook reflect decreasing financial flexibility amid high capital-market volatility. We expect KWG to use its cash balance and internal cash to repay its concentrated capital-market debt, amounting to more than CNY 16 billion through September 2022,” Fitch said in a press release.

The outlook also reflects the agency’s forecast that the company's leverage as measured by net debt/net development-property assets could remain above 50%, its negative sensitivity, for an extended period, Fitch said.

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