US ratings company Fitch has cut Chinese property developer Sunac China Holdings’ long-term foreign-currency issuer default rating to BB- from BB with a negative outlook, reports Caixin. Fitch cited Sunac’s falling financial flexibility and a drop in market confidence. It expects the company to use its cash balances to repay maturing capital-market debt. Fitch also downgraded Sunac’s senior unsecured rating and the ratings on its outstanding US-dollar senior unsecured notes to BB- from BB.
Sunac has more than RMB 12.3 billion ($1.94 billion) of onshore public capital-market bonds maturing by the end of 2022 as well as $600 million of offshore bonds due in June and another $600 million due in August. The company needs to repay RMB 928 million of asset-backed securities due February 9 and RMB 3.1 million of onshore bonds. Sunac deposited cash Wednesday for payments to the designated accounts, Caixin learned.
The company’s liquidity improved after equity placements in November and January, but it’s expected to require more cash, which may be raised via asset disposals, Fitch said. Any asset sales will face adverse market conditions, and failure would result in rapid erosion of its liquidity buffers, the credit rating firm said.