SOHO China Ltd. #BB# Rating Rating Then Withdrawn At The Company#s Request

Stocks and Financial Services Press Releases Monday March 20, 2017 17:41
HONG KONG--20 Mar--S&P Global Ratings

HONG KONG (S&P Global Ratings) March 20, 2017--S&P Global Ratings today affirmed its 'BB' long-term corporate credit rating on China-based SOHO China Ltd. with a negative outlook. We also affirmed the 'cnBB+' long-term Greater China regional scale rating on the company. We subsequently withdrew all the ratings at SOHO's request.

The affirmed ratings at the time of the withdrawal reflected SOHO's execution risk associated with a shift in the business model, high leverage, and weak financial strength. These risks are balanced by the company's good financial flexibility, high cash level, and good asset quality in Beijing and Shanghai. We estimate SOHO's leverage, as measured by a ratio of debt to EBITDA, to have been 18x-22x in 2016, compared with 24.5x in 2015.

At the time of the withdrawal, the negative outlook reflected our view that SOHO's financial leverage will remain high within the next six months, given the company's ongoing capital expenditure to bolster its investment portfolio. The rating would have remained under pressure unless the company were to reduce its sizable debt burden. We could have lowered the rating to 'BB-' if the company did not realize capital recycling, such as asset sales, that would enable it to reduce debt and improve leverage

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