[ET Net News Agency, 8 January 2020] Yuzhou Properties Co. Ltd.'s (01628) issuance of
senior notes will not immediately impact the China-based company's credit profile because
management intends to use the entire proceeds for refinancing, according to S&P Global
Ratings.
However, the credit rating agency believes the prolonged higher debt balance could
weaken the Yuzhou's credit profile if the company does not apply the proceeds promptly as
guided. The rating outlook on Yuzhou (BB-/Negative/--) has been negative since April 2019,
reflecting S&P's view that the company could face challenges in reversing its weakened
financial position.
S&P said the issuance will further lengthen Yuzhou's debt maturity, following the early
refinancing actions in the fourth quarter of 2019. However, any excess portion not
directly used to refinance senior notes may add to the company's expanding debt stock.
Yuzhou used only about half of the US$1 billion proceeds from its two recent senior
notes issuances to repurchase notes through tender, resulting in a net increase in
offshore debt from exercises aimed at alleviating maturity concentration. The company used
the rest to refinance syndicated and trust loans. Yuzhou also issued US$600 million in
senior notes in the second half of 2019 mainly for refinancing and, to a lesser extent,
for business development. (KL)