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Fitch downgrades China’s Evergrande to “CCC+” on rising liquidity pressure, Real Estate News, ET RealEstate

Fitch downgrades China's Evergrande to "CCC+" on rising liquidity pressure, Real Estate News, ET RealEstate
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HONG KONG: Fitch downgraded China’s most indebted property developer Evergrande Group on Wednesday to “CCC+” from “B” to reflect the company’s diminishing margin of safety in preserving liquidity.

The downgrade comes after another rating agency, S&P, cut the company on Monday by two notches to “B-“, with a negative outlook.

Fitch lowered the long-term foreign currency issuer default ratings (IDR) of Evergrande and its property units to “CCC+” from “B”, while downgrading the senior unsecured ratings to “CCC” from “B-“, with a recovery rating of “RR5”.

The agency said recent negative news flow on Evergrande may weaken stakeholders’ confidence, further pressuring its liquidity.

That has been heavily reliant on renewing short-term banking facilities and trust loans, continued access to trade payables and robust contracted sales to generate cash flow.

Worries over the developer’s financial health intensified after Evergrande admitted in June it had not paid some commercial paper on time, and news last week that a Chinese court had frozen a $20 million bank deposit held by the firm at the request of Guangfa Bank.

Chinese rating agency China Chengxin Credit Rating Group (CCXI) also downgraded Evergrande’s outlook to “negative” on Tuesday. The developer said it did not understand the decision, and that it will have a significant impact on its repayment ability.

Evergrande shares have fallen 60% so far this year.


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Written by Realty Beat

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