S&P turns Zhongliang view to negative

S&P said it revised the outlook for Zhongliang Holdings Group Co. Ltd. to negative from stable but affirmed its B+ issuer rating.

“We revised the outlook to negative because Zhongliang's contracted sales are likely to decline and cash generation to weaken in the next six to 12 months, thus undermining its ability to service debt. At the same time, the developer is highly exposed to offshore market volatility given its extensive use of U.S.-dollar-denominated senior notes, which are concentrated in short tenors. The risk is partly mitigated by the company's satisfactory track record of liquidity management in tough industry conditions,” S&P said in a press release.

The agency noted Zhongliang has about $1.2 billion of outstanding dollar-denominated senior notes with maturity dates from January to August 2022, including public bonds and an on-balance-sheet private bond of $150 million.

“To settle its large offshore repayment needs, Zhongliang's debt repayment plan focuses on downsizing land investment and generating liquidity sources from operations,” S&P said.

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