[ET Net News Agency, 3 October 2019] S&P Global Ratings said today that the ratings on
Future Land Development Holdings Ltd. (01030) remain on CreditWatch with negative
implications, where they were placed on 4 July 2019 following the detention of the
ex-chairman.
The credit rating agency thinks the China-based developer's refinancing capabilities
remain uncertain, despite some early signs of new financing activities. Moreover, S&P
believes the stabilization of the company's credit profile will largely depend on the full
resolution of its financing channels.
New financing came to a halt for Future Land, both in banking channels and capital
markets, immediately after the now ex-chairman's detention for criminal allegations
unrelated to company affairs.
Future Land management took swift action and completed sales of 21 projects with total
considerations in excess of RMB10 billion, in an effort to preserve cash. The agency
thinks those asset sales coupled with stable contracted sales performance averaging over
RMB25 billion per month since July have helped the company build a liquidity buffer to
meet near-term needs.
The company's early sign of improvement relates to only a few new project development
loans obtained or in negotiation, while the majority of Future Land's relationship
financial institution has yet to make new commitments.
The company has also reduced pledges in which its domestic China "A-shares" were used as
collateral for loans. Since July 2019, the amount of pledged shares has declined to 16.5%
of total outstanding shares, from over 30%. S&P believes these releases will largely
mitigate the change-of-control risk associated with financial institutions enforcing share
pledges.
S&P aims to resolve the CreditWatch placement by the end of 2019 because it expects more
information on the refinancing capabilities with onshore banks will emerge by then. (KL)