Moody's views Guangzhou Development negatively

Moody's Investors Service said it revised Guangzhou Development District Holding Group Ltd.'s outlook to negative from stable but affirmed the company's Baa1 issuer and senior unsecured ratings.

"The outlook change to negative reflects GDDH's elevated leverage owing to its significant debt-funded portfolio expansion and execution risks associated with its efforts to reduce its leverage amid the weak economic environment," said Chenyi Lu, a Moody's vice president and senior credit officer, in a press release.

The agency said it estimates GDDH's portfolio value at the combined holding company level will decline to about RMB 60 billion over the next two years from about RMB 65.7 billion as of the end of 2021.

However, Moody’s also projects that GDDH’s market value-based leverage will improve to 45% over the next two years from 68.3% in 2021, supported by lower adjusted net debt as GDDH slims the size of its portfolio in 2022-24 to pay down its debt.

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