Fitch Ratings downgraded Beijing Capital Land Ltd.'s long-term foreign and local currency issuer default ratings to BB from BB+, with a stable outlook.
The rating agency said Oct. 23 that it also downgraded the company's senior unsecured rating to BB from BB+.
The downgrade of the company's ratings follows a deterioration in the stand-alone credit profile of its immediate parent company, Beijing Capital Group Co. Ltd., to "bb" from "bb+" on the back of rising leverage in its property segment, which includes Beijing Capital Land, the rating agency said. It also noted that Beijing Capital Land's stand-alone credit profile has deteriorated to "b" from "b+" on high leverage following rapid land accumulation and weak cash collection amid tight liquidity.
Beijing Capital Land's issuer default ratings is equalized to Beijing Capital Group's stand-alone credit profile given that the former is an integral and core business segment of the group, Fitch said.
The rating agency added that Beijing Capital Land's ratings also reflect its high leverage, low sales efficiency, quality land bank, as well as its growth despite restrictive policies.
An improvement in Beijing Capital Group's stand-alone credit profile could result in an upgrade in Beijing Capital Land's ratings, while a downgrade in the ratings could result from a deterioration in Beijing Capital Group's stand-alone credit profile or any signs of weakening in linkage with the group.
As of Oct. 23, US$1 is equivalent to 7.06 Chinese yuan.