(Yicai Global) March 17 -- Moody's Investors Service has assigned a B3 senior unsecured rating to China Evergrande Group's [HKG:3333] proposed US dollar-denominated notes and given a 'negative' outlook rating, Moody's said today.
"The proposed issuance will improve Evergrande's debt maturity and liquidity profiles," said Franco Leung, a Moody's vice president and senior credit officer.
The proceeds from the issuance will be used to refinance China Evergrande's existing debt.
The rating of the proposed USD notes is notched down to B3 from its corporate family rating of B2, due to subordination risk from the company's secured and subsidiary debt, the rating company said.
Evergrande's B2 corporate family rating reflects its strong market position, strong sales execution, low-cost land bank and its nationwide and broad geographic coverage. It is constrained by the high business and financial risks associated with Evergrande's debt-funded acquisition strategy and weak financial metrics.
The negative rating outlook reflects Evergrande's high levels of business, financial and liquidity risks, given its aggressive debt-funded acquisitions, Moody's added.
China Evergrande Group is one of the major residential developers in China. It has a standardized operating model. Founded in 1996 in Guangzhou, the company has rapidly expanded its business across China over the past few years. Its land bank totaled 186 million square meters in gross floor area across 175 Chinese cities, as of June 30, 2016.