[ET Net News Agency, 21 April 2015] Moody's Investors Service has downgraded Glorious
Property Holdings Limited's (00845) corporate family rating to Caa3 from Caa1.
At the same time, Moody's has downgraded Glorious' senior unsecured rating to Ca from
Caa2. The rating outlook is negative.
The downgrade follows (1) the delay in Glorious' announcement of its 2014 results --
which have now been released -- and the fact that its external auditors have issued a
Disclaimer of Opinion based on uncertainty related to the company as a going-concern; (2)
its much weaker-than-expected liquidity and sales performance, and (3) a heightened level
of refinancing risk.
"Glorious' downgrade reflects Moody's concern over the company's high risk of default.
Moreover, its ability to refinance the bond maturing on 25 October 2015 has been weakened
substantially by the set of very poor results for 2014," said Gerwin Ho, a Moody's Vice
President and Senior Analyst.
Glorious reported a year-on-year fall of 45% in contracted sales to RMB4 billion for
The company's cash balance fell to RMB1.4 billion at end-2014 from RMB3 billion at
end-2013, which is insufficient to repay the USD300 million in offshore bonds.
"Given that most of Glorious' debt is secured, we believe the recovery prospects for
offshore bondholders are low and are reflected in its Ca senior unsecured rating," Ho
Furthermore, at end-2014, Glorious was overdue in its repayment of RMB149.6 million in
principal and RMB46.4 million in interest, said the credit rating agency.
This failure to repay on time was seen by its auditors as a cross-default event, leading
to the reclassification of RMB8.6 billion in debt as current liabilities, Moody's noted.
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