Greenland Holdings was downgraded to Ba3 from Ba2 by Moody’s and its subsidiary Greenland Hong Kong (Greenland HK) was cut to B1 from B3. The rationale for the downgrade is on the back of expectations that Greenland and Greenland HK’s property sales will fall over the next 6-12 months due to tough business and funding conditions. Besides, weakened operations will worsen the company’s profitability and financial metrics. The downgrade of Greenland HK also reflects the weakened ability of Greenland Holding to extend support if needed. Greenland’s financial metrics are set to weaken over the next 12-18 months despite its focus on deleveraging, cutting its debt by 11% QoQ and 21% YoY to RMB 256bn ($40bn) as of end-September 2021. Its debt leverage, measured by adjusted debt/EBITDA will increase to around 6x over the next 1-2 years from 4.9x for the TTM ended June 2021. Interest coverage will decline to 2.5x from 3.2x during the same period. Despite adequate liquidity, Greenland has large refinancing needs, with $2.7bn of USD bonds maturing in the next 12 months.
Separately, Greenland Holdings said it has redeemed $429.403mn of its 6.25% bonds due December 2022 at par as some bondholders exercised their put options. The outstanding amount will be reduced to $70.597mn.
Greenland’s dollar bonds were slightly lower with its 7.25% 2022s down 0.96 points to 95.88 cents on the dollar.
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