S&P cuts E-House (China)

S&P said it downgraded the ratings on E-House (China) Enterprise Holdings Ltd. and its dollar-denominated notes to B+ from BB-.

“E-House's operating cash flow will turn into a deficit. We lowered the rating because heightened counterparty risks from the company's primary real estate agency business will make its recently positive cash flow turn negative. This is because its biggest customer, China Evergrande Group (CCC/negative/--), accounting for about 25%-30% of its primary sales over the last year, has experienced liquidity stress and will likely delay payment of its bills to E-House,” S&P said in a press release.

The agency said Evergrande’s problems could hurt E-House’s cash for at least two years.

The outlook is stable.

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