Times China was downgraded to B+ from BB- by Fitch due to weakened financial flexibility as cash collection slowed in H2 2021 and tight capital markets. Slowing cash collection and costs for delivery of property have hurt its liquidity ratio (unrestricted cash/short-term debt) from 2x as of end-June 2021. January-February contracted sales have fallen 20%, further impacting cash collection. Times China has to rely on its operational cash to repay debt. Fitch however notes that Times China has sufficient cash at the onshore holdco level to repay most of its maturities in 2022 – this includes its $342mn maturing in April. The rating agency also adds that while Times China’s high non-controlling interest of 52% limits need for debt funding, it also creates risk as Times China would be dependent on capital contributions mostly from other developers to finance expansion.
Times China’s dollar bonds were down almost 1 point to trade at 30-40 cents on the dollar.
