Road King Infrastructure was downgraded to B+ from BB-  by S&P on deteriorating leverage as margins normalize. Road King’s EBITDA margin dropped to 22.1% in 2021 from 27.1% in 2020 and S&P expects it to stay low at 20-22% in 2022. Contracted sales could drop by 15-20% in 2022, it said, adding that sales declined significantly YoY in the first three months of 2022. The rating agency does expect the company to be selective and disciplined in acquiring new projects and focus on core markets in high-tier cities. While S&P expects gross debt to slightly decline in 2022 and 2023, its consolidated debt-to-EBITDA ratio is set to stay high at 8.4-8.6x during this time period.

Road King’s dollar bonds were trading higher with its 7% Perp up 1.8 points to 68.25, yielding 10.25%.

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