Fitch lowers Longfor to BBB-

Fitch Ratings said it downgraded Longfor Group Holdings Ltd.'s long-term foreign-currency issuer default rating, senior unsecured rating and the ratings on its outstanding senior notes to BBB- from BBB.

“The downgrade reflects company and sector sales performance in recent months that was weaker than we expected, which we think could dampen Longfor's cash generation and liquidity buffer. Fitch believes the sales deterioration and the recent credit events of other privately owned Chinese property developers have further delayed any normalization of Longfor's capital-market access,” the agency said in a press release.

Longfor's sales declined 3% year-over-year in 8M23, with the decline worsening in recent months, in line with the industry, as July and August sales plummeted 36%-42% yoy. “We have lowered our full-year contracted sales forecast to a 10% drop to CNY 181 billion from 6% growth previously. We believe the weaker sales will have an impact on the company's cash generation,” Fitch said.

The outlook is negative.

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