China South City Holdings Ltd.#s Proposed U.S. Dollar Senior Unsecured Notes Assigned #B-# Rating

Stocks and Financial Services Press Releases Thursday May 17, 2018 14:56
HONG KONG--17 May--S&P Global Ratings

HONG KONG (S&P Global Ratings) May 17, 2018--S&P Global Ratings today assigned its 'B-' long-term issue rating to a proposed issue of U.S. dollar-denominated senior unsecured notes by China South City Holdings Ltd. (CSC; B/Negative/--). The issue rating is subject to our review of the final issuance documentation.

We rate the senior unsecured notes one notch lower than the issuer credit rating because of subordination risk. The proposed notes will rank behind a material amount of secured debt and subsidiary-level debt in CSC's capital structure.

We expect CSC to use the majority of the notes' proceeds for refinancing existing debt and the rest for general corporate purposes. CSC has over Hong Kong dollar (HK$) 9 billion of short-term domestic borrowings due by September 2018, including a RMB2 billion domestic medium-term note (MTN) due in July 2018. In our view, the new issuance will help the company to meet debt repayments, lengthen its maturity profile, and manage its average funding cost.

In our view, CSC's leverage will remain stable compared with a year ago, and the new issuance will not have a significant impact on the leverage level. We view CSC's sales growth of 39% year-on-year in fiscal 2018 to be satisfactory, slightly exceeding the high end of its RMB10 billion-RMB12 billion sales target.

At the same time, we estimate the company's recurring income to have grown about 25%, driven by solid performance in its property management and outlets' operations as several sites gradually mature. However, the company's sales of its trade center's commercial properties remain lackluster, given the lack of economic growth momentum across its trade center locations.

The negative rating outlook on CSC reflects our view that the company's operating environment will remain tough over the next 12 months amid weakness in trade center sales in China. We expect the company to curb its capital expenditure and maintain stable leverage in fiscal 2019. Our base case anticipates that CSC's debt-to-EBITDA ratio will be around 13x-14x for fiscal 2018.


Latest Press Release

Marlborough District Council Ratings Affirmed at #AA/A-1+#; Outlook Remains Stable

- Marlborough District Council (Marlborough)'s long-term plan calls for higher levels of capital expenditure during the next few years. We expect Marlborough to record modest after-capital deficits through the forecast period, though its debt burden will...

Taupo District Council Ratings Affirmed At #AA/A-1+#; Outlook Remains Stable

- Taupo's financial management, budgetary performance, and liquidity continue to support the ratings on the New Zealand-based district council. - We expect Taupo's debt burden to decline relative to revenues as the council maintains its strong operating...

Firstmac Mortgage Funding Trust No.4 Series 2-2018 Prime RMBS Assigned Preliminary Ratings

MELBOURNE (S&P Global Ratings) May 28, 2018--S&P Global Ratings today assigned preliminary ratings to five of the six classes of prime residential mortgage-backed securities (RMBS) to be issued by Firstmac Fiduciary Services Pty Ltd. as trustee...

Corning Inc.#s Yen-Denominated Senior Unsecured Notes Rated #BBB+#

NEW YORK (S&P Global Ratings) May 27, 2018--S&P Global Ratings today assigned its 'BBB+' issue-level rating to Corning Inc.'s proposed yen-denominated senior unsecured notes. We expect the company to use the debt proceeds for general corporate...

ICBC (Asia) Leverages Cutting-edge Technology to Drive Cross-border Financial Upgrades and Development

Cross-border finance is developing rapidly thanks to the opening up of China's capital market, opportunities brought by the development of the Guangdong-Hong Kong-Macao Greater Bay Area. Take Industrial and Commercial Bank of China (Asia) as an example....

Related Topics