Fitch Ratings downgraded Chinese property developer CIFI Holdings’ Long-Term Foreign- and Local-Currency Issuer Default Ratings to ‘BB-‘, from ‘BB’, with Negative Outlook.
Fitch has also downgraded CIFI’s senior unsecured rating and the ratings on its outstanding notes to ‘BB-‘, from ‘BB’. The downgrade is driven by a reduction in CIFI’s liquidity buffer and higher leverage, it said.
“We estimate that CIFI’s unrestricted cash, excluding cash in the escrow account/short-term debt dropped to 1.0x in 1H22, from 1.4x in 2021, while leverage exceeded our previous forecast and negative rating threshold of 50%, reaching 57%, from 54%. We believe higher than expected cash outflow to joint-venture (JV) projects and large construction commitments have weakened CIFI’s credit profile.”
The Negative Outlook reflects risks to CIFI’s sales performance, additional JV cash commitments and a persistently unfavorable financing environment pressuring CIFI’s liquidity.
CIFI’s ratings are supported by relatively stable onshore funding access.