Fitch Ratings – Hong Kong/Shanghai – 19 Apr 2021: Fitch Ratings has downgraded China-based homebuilder Golden Wheel Tiandi Holdings Company Limited’s (GWTH) Long-Term Foreign- and Local-Currency Issuer Default Ratings (IDRs) to ‘CCC+’ from ‘B-‘. Fitch has also downgraded GWTH’s senior unsecured rating to ‘CCC+’ from ‘B-‘, with a Recovery Rating of ‘RR4’.
The downgrade is driven by deterioration in GWTH’s business profile, weak liquidity and high refinancing risk. Uncertainty and weakness exist in GWTH’s contracted sales outlook, as more than 60% of saleable resources are non-residential products. These are more dependent on business confidence and investor sentiment. In addition, GWTH’s residential land bank is unable to support sustained development because it has only enough land for one year of development.
The downgrade also reflects the likelihood of the company having difficulties meeting its obligations: USD255 million senior notes due January 2023 become puttable in January 2022, and USD200 million senior notes mature in March 2022.