Sino-Ocean Group Rating Lowered To #BB+# With Stable Rating Then Withdrawn At The Company#s Request

Stocks and Financial Services Press Releases Thursday June 29, 2017 17:04
HONG KONG--29 Jun--S&P Global Ratings

HONG KONG (S&P Global Ratings) June 29, 2017--S&P Global Ratings today lowered its long-term corporate credit rating on Sino-Ocean Group Holding Ltd. to 'BB+' from 'BBB-'. We also lowered the long-term issue rating on Sino-Ocean's guaranteed bonds to 'BB+' from 'BBB-'. At the same time, we affirmed our 'cnBBB+' Greater China regional scale rating on Sino-Ocean and the notes. We then withdrew all the ratings at the company's request.

The decision to lower the rating on the China-based real estate company reflects our view that the strategic relationship with the largest shareholder, China Life Insurance Co. Ltd., has not progressed as we expected. To date, the investment by China Life has largely been in Sino-Ocean's debt and equity, which are portfolio investments and not of a strategic nature, in our view. While our rating on Sino-Ocean at the time of withdrawal continued to reflect the financing advantages that come with China Life's support, we have removed the uplift from the synergies of strategic partnership.

The stable outlook at the time of withdrawal reflects our expectation that Sino-Ocean's leverage will continue to decline over the next 12 months, with a debt-to-EBITDA ratio of about 5x, from 5.6x at the end of 2016. Our estimate takes into account the company's commitment and ability to materially deleverage over the past year, and its good contracted sales performance year to date.


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