Fitch downgrades China Vanke further on liquidity concerns
BENGALURU: Ratings agency
Fitch
on Wednesday downgraded ratings for Chinese property company
China Vanke
, citing liquidity concerns amidst an ailing property sector in the world's second largest economy.
Fitch downgraded long-term foreign- and local-currency issuer default ratings (IDRs) for the embattled property developer to 'CCC+' from 'B-'.
The agency also downgraded the long-term IDR for the company's unit,
Vanke Real Estate
(Hong Kong), to 'CCC' from 'CCC+', and its senior unsecured rating and the rating on its outstanding senior notes to 'CCC', from 'CCC+'.
The downgrade follows Vanke's weak first-quarter results with sales and cash flow generation failing to meet expectations, leading to a reduction in its liquidity buffer, Fitch said.
With significant debt maturing in 2025, sales decline will have a direct impact on the company's cash generation and debt-servicing capacity, Fitch said.
Earlier this year, several rating agencies including S&P Global and Moody's downgraded the property developer citing liquidity concerns.
Last month, China Vanke said it will receive $454 million in loans from state-owned Shenzhen Metro Group (SZMG), its biggest shareholder, to repay its bonds.
"Ongoing and timely liquidity support from SZMG may be essential to address China Vanke's near-term financing requirement and support its ratings, considering the uncertainties surrounding the company's cash flow generation," Fitch said in a statement.
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