(Reuters) – Ratings agency Moody’s on Thursday downgraded Chinese developer Country Garden’s corporate family rating (CFR) to Caa1 from B1, citing heightened liquidity and refinancing risks.
Caa1 rating is a level that signals a very high credit risk, according to the ratings agency’s website.
Moody’s forecast a negative ratings outlook for Country Garden, citing uncertainty over China’s biggest privately owned developer’s ability to service its debt obligations.
Country Garden said on Tuesday that it has missed two dollar bond coupon payments due on Aug. 6 totalling $22.5 million, slipping into repayment troubles.
Moody’s also reduced its forecast for the company’s contracted sales for 2023 due to increased market concerns over the company’s liquidity and financial positions.
“The company is also likely to increase its reliance on secured debt because of the deterioration in its credit quality. As a result, the expected recovery rate for senior unsecured claims at the holding company will be lower,” Moody’s said.
Moody’s ratings change comes at a time when China’s giant property sector is seeing a string of debt defaults by cash-squeezed developers, with China Evergrande Group, the world’s most indebted property developer, at the centre of the crisis.
(Reporting by Akanksha Khushi in Bengaluru; Editing by Bernadette Baum and David Evans)
