Kaisa was downgraded two-notches to Caa1 by Moody’s from B2 with a negative outlook. Its senior unsecured ratings were down to Caa2 from B3 due to structural subordination risk.  The downgrade was on the back of Kaisa’s “heightened refinancing risks because of its weakened funding access and sizable debt maturities” over the next 12-18 months. About 58% of its debt is in the form of offshore bonds with $3.2bn maturing or puttable by end-2022. Despite having RMB 38bn ($5.9bn) of unrestricted cash as of end-June 2021, it is unclear how much can be used to pay down debt due to increased JV exposure. “The approval of an interim dividend payment at a time when liquidity preservation is crucial, also weakens the protection to creditors,” said Cedric Lai, VP at Moody’s.

Separately, Kaisa plans to sell its entire 67.18% stake in property management unit Kaisa Prosperity Holdings Ltd besides two residential sites in Hong Kong, as per Reuters sources. The unit has a market value of HKD 2.4bn ($310mn). However, one of the sources said that no clear buyers have emerged.

Kaisa’s dollar bonds were steady with its 10.875% Perp at 24.26.

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R&F Properties was downgraded to B- from B+ by Fitch on the back of a limited funding access amid refinancing needs in the coming 12 months.  While the developer has RMB 836bn ($130bn) of total saleable resources and also has the recent financial support by its major shareholder, its asset disposals face execution risk and may leave it a limited liquidity buffer. Also, while R&F is likely to repay the upcoming bond maturities using cash, it can lead to a deterioration in its business profile. R&F had RMB 29bn ($4.5bn) in cash balances as of end-June 2021. It has RMB 18bn ($2.8bn) of capital-market debt maturing or becoming puttable in the 2022, beginning with $725mn due in January 2022. Although R&F expects substantial cash flow from operations and reach its sales target, contracted sales slowed 29% in September which can affect refinancing risks. Besides, limited capital market access hurts refinancing.

R&F’s dollar bonds were lower with its 11.75% 2023s down 2.7 points to 61.3.

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