(The following was released by the rating agency)
HONG KONG (Standard & Poor's) Jan. 3, 2013--Standard &
Poor's Ratings Services today assigned its 'BB-' issue rating
and its 'cnBB+' Greater China regional scale rating to a
proposed issue of 10-year U.S.-dollar-denominated senior
unsecured notes by Country Garden Holdings Co. Ltd.
(BB/Stable/--; cnBBB-/--). The ratings are subject to our review
of the final issuance documentation. The company will use the
proceeds from the proposed issuance to refinance its existing
debt and for general corporate purposes.
The issue rating on Country Garden's proposed notes is one
notch lower than the corporate credit rating to reflect our
opinion that offshore noteholders would be materially
disadvantaged, compared with onshore creditors, in the event of
default. In our view, the company's ratio of priority borrowings
to total assets will remain above our notching threshold of 15%
for speculative-grade debt.
The rating on Country Garden, a Chinese real estate
developer, reflects the company's sales concentration in
Guangdong province and its exposure to market risk in third- and
fourth-tier cities where the depth of the market and sensitivity
to economic cycles may not support a large supply. The rating
also reflects our negative outlook for the Chinese property
sector and the continued challenging operating conditions for
the next six to 12 months. These risks are tempered by the
company's strong track record in Guangdong province, its large
scale and low-cost land bank as well as improving execution.
The stable outlook reflects our expectation that Country
Garden's sales are likely to remain resilient over the next six
to 12 months despite an ongoing market correction in China. We
estimate the company's contracted sales at more than 40 billion
Chinese renminbi and a moderate growth in total borrowings in
the next 12 months. We believe that Country Garden will maintain
adequate liquidity while pursuing growth.
RELATED CRITERIA AND RESEARCH
-- Methodology: Business Risk/Financial Risk Matrix
Expanded, Sept. 18, 2012
-- Methodology And Assumptions: Liquidity Descriptors For
Global Corporate Issuers, Sept. 28, 2011
-- 2008 Corporate Criteria: Analytical Methodology, April