(The following was released by the rating agency)
Sept 14 (Fitch) Fitch Ratings has assigned Nan Fung Treasury
Limited's proposed USD notes an expected rating of 'BBB(EXP)'.
The notes are to be unconditionally and irrevocably guaranteed
by Nan Fung International Holdings Limited (Nan Fung,
'BBB'/Stable), a Hong Kong property developer.
The final rating is contingent upon the receipt of final
documents conforming to information already received. Nan Fung's
ratings reflect its established brand name, and strong liquidity
and financial profile. It has over 45 years of experience in
high-end residential and commercial real estate development in
At its financial year to March 2012, Nan Fung remained in
net cash position and maintained strong liquidity; it had cash
of HKD11.9bn against short-term bank borrowings of HKD2.3bn. Its
liquid financial investment portfolio of HKD19.6bn and
unutilised committed banking facilities of around HKD7bn provide
additional financial flexibility.
What could trigger a rating action?
Positive: Future developments that may, individually or
collectively, lead to positive rating action include: - the
investment property division contributing a substantial portion
of the company's asset and EBITDA - financial assets portfolio
and cash levels remaining above total debt levels - investment
property EBITDA (rental and management fees) to gross interest
expenses (including capitalised interests) above 2x on a
sustained basis (FY12:2.1x)
Negative: Future developments that may, individually or
collectively, lead to negative rating action include: - poor
execution of Nan Fung's property development projects on a
sustained basis - significant weakness in both the Hong Kong and
Chinese property markets leading to substantial decline in
property prices - recurring EBITDA (investment property,
dividend and coupon from the investment portfolio) to gross
interest expense (including capitalised interests) below 2x on a
sustained basis (FY12: 10.7x).