[ET Net News Agency, 8 October 2019] Moody's Investors Service has upgraded Jiayuan
International Group Limited's (02678) corporate family rating (CFR) to B2 from B3 and the
senior unsecured rating on its USD notes to B3 from Caa1.
The outlook on the ratings is stable.
"The upgrade reflects our expected reduction in Jiayuan's change of control risks as a
result of the completion of asset injection and reduced share pledge loans by its
chairman," said Josephine Ho, a Moody's Vice President and Senior Analyst.
The equity-funded asset injection by Shum Tin Ching, the chairman and the largest
shareholder of the company was completed in August 2019. And, over the last two months,
Shum has reduced his share pledge loans by 17%.
These two developments have reduced the amount of the chairman's shares pledged for
financing to 15% of the company's outstanding shares versus Shum's 69% ownership in the
company as of 30 September 2019. Such a situation, in turn, has reduced the risk of a
change of control that could be triggered by a reduction in the chairman's stake in
Jiayuan.
"In addition, the completion of the asset injection will support Jiayuan's contracted
sales growth and liquidity over the next 12-18 months, and broaden its geographic coverage
to levels that are comparable to its B2-rated China property peers," added Ho.
Moody's expects that Jiayuan's contracted sales will grow to RMB25-RMB30 billion over
the next 12-18 months from RMB20 billion in 2018. In the first eight months of 2019, the
company's contracted sales grew 50% to RMB16 billion. (KL)