Second property developer gets bad rating
- Source: Global Times
- [13:11 June 17 2010]
- Comments
Glorious Property sees over 30 percent of its revenue come from its Shanghai Bay development in Xuhui district, according to Moody's. The report said that Glorious Property's high operating and financial risks arose from its rapid growth and its short track record in a highly volatile Chinese property market.
The report said that Glorious Property's rating outlook could revert to "stable" if the company strengthens its liquidity profile by securing more long-term fi-nancing.
"This downgrading may cause them more difficulties when raising funds," said Xue. "They need to learn how to maintain sufficient cash flow while expanding."
Shanghai-based Zendai Property also saw its Moody's rating outlook downgraded to "negative" last Friday.
"The downgrade reflects the increased financial and operational risk associated with Zendai's February 2010 acquisition of land in Shanghai for 9.22 billion yuan ($1.3 billion), which is larger than its asset base of 8.5 billion yuan ($1.24 billion) as of the end of 2009, in light of the tightening regulatory environment in China's property market," said Tsang.
Shanghai Zendai's purchase of land on the Bund for the surprisingly high price of 9.2 billion yuan ($1.3 billion) raised eyebrows in the industry and attracted widespread media comment.
