Chinese property developer Sunac was downgraded to B- from BB- by S&P due to weak liquidity as it faces increased refinancing risk. It faces a high bond maturity wall with RMB 24bn ($3.8bn) of offshore and onshore public bond maturities in the next 12 months. Due to cash restrictions at project escrow accounts and using cash for debt payments, S&P estimates that accessible cash at the holdco level has plunged to RMB13-14bn ($2-2.2bn) at end-2021. Further burden has been added by its private placement notes (PPN) which mature in the coming 12 months. S&P adds that a rising risk of restructuring exists on Sunac’s onshore debt and that sustaining relationships with onshore banks would be critical to its operations. Additionally, its asset disposals plan has been slower than previously anticipated.

Sunac’s dollar bonds were trading lower with its 7.25% 2022s down 2.9 points to 42.39.

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