E-House was cut to CCC from B by S&P with a negative outlook. The downgrade comes on the back of high repayment pressure for its $300mn bonds due April 2022 and beyond amid deteriorating liquidity. While S&P noted that “it is not entirely impossible for E-House to obtain new funds or sources of liquidity”, the issue must be addressed urgently. The real estate transaction services company is expected to continue facing risks in collecting various payments from developers due to the sectoral downturn, hurting its operational cash flows. S&P expects operating cash flow in H2 2021 to have likely reversed to a deficit, from a positive RMB 557mn ($mn) in the H1 2021 with H1 2022 cash generation also epected to remain weak. New funding is vital for the company, but current market volatility and soft investor sentiment weigh on the company’s resources.
E-House’s 7.625% 2022s were down 6 points to 60.27.
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