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Fitch Ratings placed Chinese property developer CIFI Holdings’ Long-Term Foreign- and Local-Currency Issuer Default Ratings of ‘BB-‘, and the senior unsecured rating and the ratings on the outstanding notes of ‘BB-‘, on Rating Watch Negative (RWN).
The move follows CIFI’s announcement that cash distribution for an investment trust product, which was used to finance a property development project in Tianjin, was affected and that negotiation with the issuer of such product is ongoing.
“We are assessing how CIFI’s use of a non-standard financing arrangement, which was not previously disclosed, could negatively affect its regular access to funding, liquidity and financial flexibility. Should CIFI fail to stabilise the situation, its rating could be downgraded by one notch or more.”
CIFI said on 28 September that cash distribution for an investment trust product, which was used to finance a property development project in Tianjin, was affected and that negotiation with the issuer of the product is ongoing. It also said it has over 30 billion yuan in cash, based on an unaudited estimate, the majority of which relates to the group’s property development projects, including restricted presale proceeds deposited in designated bank accounts.