[ET Net News Agency, 18 January 2018] S&P Global Ratings said today that its rating on
Country Garden Holdings Co. Ltd. (BB/Positive/--)(02007) are not immediately affected by
the China-based developer's US$3 billion proposed share placement and issue of guaranteed
convertible bonds.
"This is because we expect the fundraising exercise will not materially change the
company's leverage, considering the adjusted debt of RMB185 billion as at June 30, 2017."
the credit rating agency said.
The fundraising exercise will help improve the company's capital structure. The proposed
share placement and convertible bond represent approximately 2.1% and 3.6% of the existing
issued share capital.
Country Garden's shares could increase by up to 5.7%, depending on the conversion rates
of the convertible bonds. Part of the proceeds will be used for refinancing the company's
existing debt, in addition to general corporate purposes.
It thinks the issuance also demonstrates Country Garden's good access to capital
markets. A US$3 billion fundraising is sizable compared with recent cash calls by
similarly rated peers.
The developer's access to multiple funding channels, including the equity market, could
provide more flexibility to support its active growth strategy. Nevertheless, S&P believes
Country Garden's deleveraging plans will primarily depend on a more prudent financial
management during the company's expansion over the next two years. Growth in recent years
has been heavily debt-funded. (KL)