Fitch downgrades Chinese property developer Longfor to ‘junk’
FITCH Ratings downgraded China’s second largest private property developer Longfor Group to “junk” on Thursday (Mar 28), citing persistent weakness in the company’s and the sector’s sales performance.
Fitch downgraded Longfor to ‘BB+’ from ‘BBB-’, which was the last notch for the investment-grade ratings, adding a negative outlook.
“The Negative Outlook captures our view that a sustained sales recovery and the eventual normalisation of private developers’ funding access remain uncertain,” it said in a statement.
Longfor has significant maturities in bond and syndicated loans in 2025, amounting to 31 billion yuan (S$5.8 billion), according to Fitch.
The developer last week said it has set sufficient funds aside to repay a 1.5 billion yuan bond maturing in May, and it plans to raise more money through domestic bank loans and state-guaranteed bonds this year.
Its 2023 core profit, which excludes changes for fair market valuations of property and financial instruments, halved to 11.35 billion yuan amid an industry-wide sales slump.
The sector has been reeling under a debt crisis since mid-2021. But unlike many peers such as China Evergrande Group and Country Garden, Longfor has not defaulted on debt obligations. REUTERS
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