Moody’s on Thursday further downgraded Chinese property developer Country Garden’s corporate family rating (CFR) to Caa1 from B1, citing heightened liquidity and refinancing risk after the company missed bond payments.
Moody’s forecast a negative ratings outlook for Country Garden, citing uncertainty over the developer’s ability to service its debt obligations.
It also lowered the forecast for the developer’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.
The move came after Moody’s on Friday downgraded Country Garden’s rating to B1 from Ba3, putting the company further in junk territory after it recently canceled a $300 million share sale and capital raising.
Country Garden was seen as one of a few Chinese property developers to have weathered a severe downturn in the market over the past three years, amid dwindling sales and increased regulatory scrutiny towards capital raises.
Country Garden has also flagged a potential loss in the first half of 2023, while a slew of upcoming bond maturities saw traders positioning for a potential default. Country Garden’s bonds were trading at record lows this year.