China Aoyuan has been downgraded for the second time this week by Fitch to CCC- from B-. Fitch said that the downgrade reflects the diminishing likelihood of Aoyuan refinancing its $500mn 8.5% bonds due January 2022 and $188mn 4.2% bonds due January 2022. This comes after Aoyuan won creditors’ approval to extend the redemption date of its RMB 550mn ($86mn)  Aochuang II ABS and appointed a financial adviser and a legal adviser.

Aoyuan had available cash of RMB 51.8bn ($8.1bn) with a majority likely to be at project level. It also has a large RMB 8.8bn ($1.4bn) of debt maturing or becoming puttable by end-2022. Adding to its woes is the access to capital markets remaining grim, with its cash/short-term debt ratio holding just above 1x likely to be insufficient to buffer against the currently volatile environment. While Aoyuan is relying on asset sales, it will take time to be completed.

Aoyuan’s dollar bonds are lower with its 4.2% 2022s down 1.3 points to 35 cents on the dollar.

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