Agile Group was downgraded to B2 from B1 by Moody’s on the back of increased refinancing uncertainty and governance risks. This comes after Agile announced that it will not publish its audited financials by 31 March, and expects to do so by May 15. This impacts its ‘transparency and information disclosure’, Moody’s said. The delay could hurt its ability to access new funds and thus raise liquidity and refinancing risks in the near-term. It has ~$600mn in offshore bonds due in August 2022. While it had unrestricted cash of RMB 46.5bn ($7.3bn) at end-June 2021, the rating agency believes this has “declined considerably” by year-end. Also Agile is not expected to use all its cash to repay debt as it has to keep a considerable amount at project and operating company levels. While the developer has been raising funds through asset disposals and exchangeable bond issuances, Moody’s believes that the timing of further asset disposals to repay debts remain weak. It adds that potential buyers of assets could also delay purchases until Agile publishes its audited results.
Agile’s dollar bonds were trading marginally higher – its 2022s were at 55 cents on the dollar, 2025s at 30 cents and Perps at ~20 cents.
Zhenro Properties was downgraded to RD from C by Fitch upon the completion of an exchange offer and consent solicitation. This is in accordance with Fitch’s rating definitions. Zhenro’s consent solicitation for its dollar Perp was completed on March 29, where it will redeem the $200mn Perp on March 6, 2023 at 102% of the outstanding principal amount plus accrued interest. Zhenro announced last week that bondholders agreed to waive potential breaches or defaults on its outstanding notes. It also completed an exchange of of five bonds (dollar and renminbi) due this year for new bonds due in March next year.
Zhenro’s dollar bonds were trading slightly higher at ~11 cents on the dollar.