Greenland Holdings was downgraded to B- from B+ and the bonds guaranteed by the parent to CCC+ from B by S&P. The downgrade comes on the back of deteriorating liquidity and cash depletion for debt repayment. Despite deleveraging efforts, its unrestricted cash to short-term debt fell to 0.6x in 2021, and to 0.5x at the end March 2022, from 0.8x in 2020. The developer will have to rely heavily on cash flows from property sales, asset disposals, and refinancing its onshore bank loans to meet its short-term debt maturities. With contracted sales down 57% YoY in the first four months of 2022 and an expected 10-15% sales decline for the remaining eight months, its cash flow generation is set to weaken. Besides, the majority of Greenland’s cash is at the subsidiary level and could be trapped at escrow accounts. The rating agency also adds that its asset disposals face execution risk, adding further uncertainty.

Greenland’s dollar bonds were up slightly with its 6.75% 2023s up 0.6 points to 53.5 cents on the dollar.

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