(The following was released by the rating agency)
HONG KONG, October 12 (Fitch) Fitch Ratings has assignedproperty developer Sunac China Holdings Limited's (Sunac,'BB-'/Stable) USD400m 12.5% notes due 2017 a final rating of'BB-'. The assignment of the final rating follows the receipt ofdocuments conforming to information already received and thefinal rating is in line with the expected rating assigned on 4Oct 2012.
The notes are rated at the same level as Sunac's to reflectthat they represent direct, unconditional, unsecured andunsubordinated obligations of the company.
Sunac's ratings are supported by its strong housing presalesperformance and its increased business scale in the Chinesehousing market. The ratings are constrained by Sunac's limitedgeographical diversification and product mix.
What could trigger a rating action?
Negative: Future developments that may, individually orcollectively, lead to negative rating action include:
- adverse changes to Sunac's markets and product mix leadingto an EBITDA margin below 25% (2011: 28.1%)
-aggressive land-bank acquisitions resulting in funds fromoperations (FFO) interest coverage below 3x (2.6x in 2011 butFitch expects this to exceed 3.5x from 2012) or netdebt/inventory above 35% (34% in 2011)
-contracted sales in 2012 of under CNY20bn Positive:Positive rating action is not expected in the next 24 monthsgiven the constraints posed by its limited product mix and lackof diversification.
Keywords: MARKETS RATINGS SUNAC